Why this might be the best time to buy a house
FM Nirmala Sitharaman announced income-tax relief for home buyers and developers among other Atmanirbhar Stimulus 3.0 announcements on Thursday.
Among other measures, in order to encourage people to buy houses during the festive season, FM Nirmala Sitharaman gave income-tax relief to home buyers and developers. FM hiked the differential for tax relief between the circle rate and market rate to 20 per cent from 10 per cent earlier on the sale of units valued above Rs 2 crore till June 21, 2021. This means homebuyers can buy a house which is 20% less than the circle rate without attracting tax.
The circle rates are the prices set by the government for the property in an area, whereas the agreement rate or market rate is the negotiated rate at which the transaction takes place between the buyer and the seller of the real estate. The buyer also has to pay the stamp duty on circle rates while buying. Recently, prices have gone below the circle rates in some parts owing to a lack of demand and later due to coronavirus. When the buying price is below the circle rates, the saved money is treated as income in the hands of the buyer and is therefore taxed.
Real estate developers cheered the move given the former’s struggles to dispose of piling unsold inventory. Developers say will boost demand and will be beneficial for the buyer.
Developers say next 6-7 months are best for investors to buy real estate owing to historically low-interest rates, circle rates, and tax levy.