Budget 2019 made a number of changes for real estate investors. The major changes are as follows:
Section 54 Benefits Enhanced
Section 54 of the IT Act, 1962 grants the benefit of exemption on long term capital gains tax on sale of house property if the proceeds are used for purchase of new house. The Section 54 benefit is available if purchase of the new house is made up to 1 year before or up to 2 years after the house property is sold. If you are constructing a new house, the construction must be completed within 3 years of the sale of the old house property.
Budget 2019 has allowed the rollover benefit of capital gains u/s 54 has been increased from investment in one residential house to two residential houses if a taxpayer has capital gains of up to Rs. 2 crore. However this benefit is available only once in the investor’s lifetime.
Exemption for TDS on Rent Increased
TDS is deductible on rent under section 194I and is usually not applicable to HUF or individuals unless they are subject to tax audit and liable to deduct tax at source.
Budget 2019 has increased the exemption for TDS on rent from Rs 1.8 lakh to Rs 2.4 lakh.
Income Tax Exemption on Notional Rent
If you have more than one self occupied house, all your houses apart from the first one was deemed to be let out and an income tax was levied on the notional rent. Interim Budget 2019 has exempted the income from a second house from tax. Thus you can now own up to two separate self-occupied houses without adding to your income tax burden.