Budget gives realty sector a real boost

FM Piyush Goyal in his interim budget speech has allowed individuals to invest in two houses to gain benefits from roll-over capital gains under Section 54 of the Income Tax Act. Also, the FM has exempted individuals from paying tax on notional rental income for the second vacant home. 
  
Currently under section 54, to save on the capital gains made on the sale of a residential property, one is allowed to invest only in one other house property. Now, the FM has proposed to increase it to two properties than just one for taxpayers having capital gains up to Rs. 2 crore. However, this advantage can be availed only once in a lifetime. 
  
In the current tax regime, if an individual owned two properties, one of them would be considered as self-occupied and the second home was taxed based on notional rental income. Now the FM has exempted individuals from paying tax on notional rental income for the second home, citing the need for individuals to maintain two households at times due to switching jobs, long commutes etc.This means the benefits of the self-occupied home is extended to the second home also, if it's vacant.

In addition, builders and property developers also received some relief from the Finance Minister. Earlier, builders were subject to tax based on notional rental income for holding unsold inventory in their portfolio for more than one year. The government has now extended the holding period to two years.

Expecting fresh buying in housing property owing to the new tax policy, the realty index gained post the budget announcement. The index was up by 1.33 per cent at closing hours on Friday. Shares of Indiabulls Real Estate, Phoenix Mills, Oberoi Realty were all up by over 3 per cent intraday.
  
Meanwhile, Sensex added 212.74 points, up by 0.59 per at 36,469.43 at closing bell and Nifty50 was at 10,893.65 level, up by 62.70 points or 0.58 per cent.