- Real estate sector is being benefitted by the recent budgets as there are two proposals that will boost the industry
- Major announcement was increase in the tax deduction for interest paid on housing loans by self occupied properties from 1,50,000 to 2,00,000 a year
- The ongoing house loans EMI’s are benefited and hopefully push those considering investing in a house into making that decision
- It’s a good option for aspiring home buyers this year as the interests are likely to tend down and interesting than this concession though is the clarity that the Budget brings to taxation of real estate investment trusts, or REITS, which are akin to mutual funds in the stock market
- Investors buy units from RETIS and use the money to invest and use the money in the projects mainly commercial to earn rental income and then distribute the same to unit holders as they are listed on the stock markets like any other shares
- Finance Minister cleared that these units will be taxed similar to equity shares and they do not have to pay corporate tax
- It is clear in the budget the promoter will be liable for capital gains tax and not when he exchanges his shares from the project but when he sells them
- The proposal are in par with the market expectations and is good for REITS which are important in many ways, immediately REITS could help unlock for promoters capital invested in finished but idle projects
- On a long term these trusts will help capital formation in the real estate business and relieve the burden on banks, which are now stressed with non-performing real estate loans, among others and RTES will help the domestic investors as well who cannot invest large money
- The one who wants to have real estate in their portfolio as they can invest in units that are expected to be priced as low as Rs.1,00,000 going by draft guidelines of market regulator SEBI and the guidelines will work once it is passed in the parliament
- Read at: http://www.thehindu.com/todays-paper/tp-opinion/building-the-reit-way/article6247098.ece