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The budget proposals affecting owner of a property

Author: Balwant Jain/Wednesday, February 6, 2019/Categories: Income Tax

The budget proposals affecting owner of a property

This budget as expected has mainly focussed on the elections 2019 and has only focussed on providing relief to the large number of voters. This has proposed many amendments in the Income Tax Laws to bring benefits for the owners of houses. Let us discuss these proposals in details.

Self occupied house properties

For the taxpayers who are owner, of more than one house and also occupy more than one house, are required to opt any one such property as self occupied and the other as let out. In respect of such deemed to have been let out properties, you have to pay notional rent as tax. To give relief to the people who own house in their native place reserved for their use as and when they visit there or in cases where the house owned by the tax payer is being used by other family members, the finance minister (FM) has proposed that the assessee will be entitled to have two properties owned as self occupied property. Now tax payers will be able to claim two owned houses as self occupied without having to pay any tax on such notional rent provided the same is/are not let out. However, they will be entitled to claim only an aggregate amount upto Rs 2 lakhs in respect of interest paid on home loan for both the properties taken together.

Long term capital gains

Section 54 allows you exemption from long term capital gains (LTCG) tax arising on sale of any residential house provided the indexed LTCG is invested for purchase or construction of another residential house within the time prescribed. The FM has proposed to expand this benefit for buying or constructing two residential houses for LTCG not exceeding Rs 2 crore. This exemption can only be claimed by you once in your lifetime.

Enhancement for limit on TDS on rent

The third benefit proposed by the FM is for owners of any let out property in the form of increased limit for rent upto which the lessee will not have to deduct tax before paying you rent. At present, this limit is Rs 1.80 lakhs which is proposed to be increased to Rs 2.4 lakhs from next financial year for each of the year. The tax has to be deducted by the lessee other than an individual or an HUF. However, an individual or HUF are also required to deduct TDS on rent in the case of individual engaged in business or profession and whose accounts were required to be audited for the purpose of income tax during the preceding year.

The author is a tax and investment expert and can be reached on jainbalwant@gmail.com

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Balwant Jain
Balwant Jain

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