Tax deduction on home loan interest to boost housing demand, says realtors

The demand for housing units worth up to Rs 45 lakh will rise on account of additional Rs 1.5 lakh tax deduction provided in the Budget on interest paid on housing loans sanctioned this fiscal to first-time homebuyers, property developers and consultants Friday said, while hailing proposals to promote rental housing and improve liquidity of NBFCs.

Many players, however, rued that the real estate sector was not given 'industry' status and no stress fund got created for stalled projects. Some also complained about the cap of Rs 45 lakh on tax deduction on home loan interest.

Jaxay Shah, chairman of realtors' apex body CREDAI, said the Budget will provide thrust to the real estate sector and boost housing demand but said there was no need to keep a cap of Rs 45 lakh for the deduction.

He requested the government to extend this benefit to all homebuyers without any cap of value of housing property.

NAREDCO President Niranjan Hiranandani said, "The government's idea to provide affordable housing (to all) will be a possibility and is successful in almost all cities except Mumbai where there is a paucity of land. I believe that the additional incentive of Rs 1.5 lakh on interest on loans borrowed under the affordable housing would give a boost to the real estate sector further."
PropTiger and Housing.com CEO Dhruv Agarwala said the standout announcement in Union Budget 2019, for the real estate sector, was the additional deduction of Rs 1.5 lakh. "This boost on the demand side was clearly needed considering that many homebuyers have turned fence-sitters, awaiting such tax sops or correction in prices."
Knight Frank CMD Shishir Baijal said the Budget has taken note of some of the key challenges of the sector in terms of the ongoing NBFC crisis and the tough residential market. "We hope that the measures of enhancing bank funding to the NBFC sector and tax incentives around affordable housing will help the cause."