Real estate sector expects home loan interest sops, affordable housing expansion from Budget

Finance Minister Nirmala Sitharaman is gearing up to present a Vote-on-Account or Interim Budget for 2024. Despite signaling a lack of “spectacular announcements,” real estate stakeholders remain hopeful that some of their key demands may be addressed. These demands include an increase in the home loan interest deduction limit, a revision in the definition of affordable housing, and the grant of industry status for the real estate sector.

One significant expectation is the raise in the deduction limit for home loan interest payments under Section 24B. The current limit of Rs 2 lakh annually, unchanged since 2014, is proposed to be elevated to a minimum of Rs 5 lakh. Industry experts argue that this adjustment is crucial to stimulate housing demand, particularly in the affordable housing segment, given the rise in property prices and higher borrowing amounts by homebuyers.

Affordability concerns in home buying, especially in metros, have led to demands for the reintroduction of incentives and the update of affordable housing definitions. Sales in the affordable category have seen a decline, and experts urge the government to announce measures, such as tax breaks, to encourage developers to construct more affordable housing. Standardizing affordable housing definitions across government and financial institutions is also recommended to maximize benefits for buyers.

Regarding the definition of affordable housing, experts suggest that a blanket price cap is inappropriate. The threshold for affordable housing is proposed to be increased to Rs 85 lakh for metropolises like Mumbai and Rs 60–65 lakh for other large cities. Granting industry status to the real estate sector is another longstanding demand from the supply side, aiming to simplify processes for developers and provide additional advantages.

The rationalization of capital gains tax is also highlighted, with a recommended reduction in the prevailing 20 percent capital gains tax to incentivize investments and foster economic growth. Simplification in the capital gains structure is desired by retail investors for further clarity. Overall, stakeholders are optimistic that the Interim Budget for 2024 will address these concerns and provide much-needed support to the real estate sector.