After the announcements made in the Budget 2017, you can now sell a property after 2 years of buying as the holding period for computation of long term gains has been reduced to 2 years from the existing period of 3 years.
Joe Verghese, Managing Director, Colliers International India, says, "Reduction of long term capital gains tax period will provide respite to investors/ developers of real estate. This is a great move to providing tax relief where the sales have significantly dropped post demonetisation move."
Also, the base year for indexation has been proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property. This will result in less tax liability as cost of acquisition going to become lower.
The formula for indexed cost of acquisition is (Actual cost of purchase) x (CII Of Year of Sale)/(CII of Year of Purchase).
The announcements have come at a time when the real estate sector has been looking at measures to boost the sentiments. The real estate sector which was the hardest hit by demonetisation move will be one of the major beneficiaries of this budget.
Anil Chopra - Group CEO & Director, Bajaj Capital, says, "Reduction in holding period for land & building for computation of long term capital gain from 3 years to 2 years is the positive announcement . This will spur the sale/purchase activity in the real-estate sector."
Another good move is the shift in eligibility criteria of affordable housing. Shishir Baijal, Chairman & Managing Director, Knight Frank India, says, "We believe that the shift in eligibility criteria for Affordable Housing from built up area to carpet area will increase the unit size by 20-30 per cent and will offer home buyers the benefit of owning larger units. This will also encourage leading real estate players to enter the Affordable Housing segment."
In an another important move it is proposed that set off of loss under the head "Income from house property" against any other head of income shall be restricted to two lakh rupees.