Wednesday, February 17, 2010

Home buyers may find this Budget friendly

The Budget is round the corner. It’s again that time of the year when expectations get built up for lollies that would be doled out.

Exemption limit for interest:

What about the interest component of the home loan? There is a soft corner for home buyers and they may find this Budget friendly. There could be a raise in exemption limits for interest from Rs 1.5 lakh to say Rs 2-2.5 lakh.

This may be a prelude to kick off the withdrawal of the stimulus as a sop like this could be expected to prop up the property mart and keep the momentum going, despite withdrawal of stimulus. Since real estate sector has deep linkages to scores of sectors, it may make sense to prop it up. Increasing the limits here would hence be a master stroke. I will be surprised if the finance minister does not raise the limit here.

Full exemption?

Government’s professed intention is to provide shelter for all. In line with this and in view of the huge escalation in the cost of housing, the finance minister should consider giving full exemption to the interest component of the loan, in a year, much like it is done in for education loans.

Simplified formula for the rent paid:

Rent paid by an individual is now subject to the one-in-three formula. It can be simplified to just one standard figure, which could be say 3% of the average (property) price in an area.

For instance, the approved rates forsay Andheri (a suburb of Mumbai ) is between Rs 7,000 - Rs 15,000 psf, then the average comes to Rs 11,000 psf. For a 1000 sq ft area home, the rental for a year would come to Rs 3.3 lakh. Any other formula which is simple to understand and adhere should be fine too.

To read more, please, visit Budget unlikely to tinker with the tax exemption limit

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9 comments:

  1. I am waiting for the day when budget 'll announced. I don't want to make my decision's now. I 'll wait for it.

    ReplyDelete
  2. Has FM gone nuts ? Even considering option of exemption increase for interest is madness, leave alone FUULL exemption, thats crime.

    And siting reason of escalated housing cost ? Hoarding is root for this, cost has not escalated, its sellers greed that has escalated. All flats being sold at 50lakhs in Pune are worth 15-20 lakhs price tag only. With stimulus package, why were builders allowed to hold on to prices and increase ? They should have been forced to lower prices and clear outstanding debts last year itself instead of allowing restructring of bad loans. Bubbles , BIG BIG BUBBLES are mounting in indian RE sector and its bust will take everything down. Control this NOW or be ready for economic downfall of India

    ReplyDelete
  3. "I will be surprised if the finance minister does not raise the limit here "

    what a joke!! All in all u will never talk about reducing prices!! Why were the prices not reduced even during harsh recession time..There was hardly any demand that time...Why did greedy builders hold onto their inventories...why should they be bailed out by giving some petty incentivies to buyers!! Why did not u ever talk about builders not reducing prices!!

    ReplyDelete
  4. Ref: "Why did not u ever talk about builders not reducing prices!!"

    Are you asking me? If yes, then read this:

    1) Everyone, including builder, has a right to price his product.

    2) Real estate price and offers are 100% negotiable.

    3) My experience is - It's the property buyers who rule the market, and not the builders.

    4) When you complain about the high real estate prices, you complain about those property buyers who pay the high property rates which you can't afford.

    5) Government will always support real estate developers because government is nothing but a big real estate company.

    How is this?

    ReplyDelete
  5. Ref: "Why were the prices not reduced even during harsh recession time."

    Recession is going on for last couple of years. In Pune real estate market prices had come down.

    Even at this point of time property prices are less than the launch prices of the projects where property buyers are buying only if a price is less. For example, at Nanded City Pune, Megapolis and Blue Ridge Hinjewadi property rates are less, Rs. 2800-2900 per sq.ft., than their launch prices, Rs. 3,200 per sq.ft.

    Whereas, in Wakad, Pimple Saudagar and on Baner Road, property buyers are happy to pay more rate so rates have gone back to the old level, even above!

    Point is: It's all about what rate property buyers love to pay!

    So, if you want low property rates, instead of complaining, start convincing the property buyers to pay less. You have that power to bring down the property rates!

    ReplyDelete
  6. "Refr: So, if you want low property rates, instead of complaining, start convincing the property buyers to pay less. You have that power to bring down the property rates!"

    Hey, Buyers , STOP buying.

    Let's bring down the RE prices ...

    Anyone listening ???

    ReplyDelete
  7. i heard that from 2011 interest paid on home loans will not be exempted ? Any thoughts ..why dont u talk about that then? for this budget u r saying that it wil be buyer friendly..what if direct tax bill is applicable and buyers are not given any exemption on interest from 2011..what will u advise in that case? Please give complete picture to buyers and not half baked cake!!

    ReplyDelete
  8. Ref: "Please give complete picture to buyers and not half baked cake!!"

    Yes, you are right. I admire your knowledge and concern for the buyers. I should give complete picture to the buyers. However, if i give only half picture, i am sure, knowledgeable and concerned person like you will use this space to give a complete picture to the buyers. Right?

    You know this is a blog. Here there is no one way traffic. This is a conversation. You are not only reading but writing too. You share your knowledge and views with the readers and give them the complete picture.

    On the way, yes, you can feel free to thank me for starting this conversation and giving you an opportunity to post your views which are completely different or even opposite from the views expressed by me or anybody. Right?

    Thanks!

    ReplyDelete