Introduction
As the Union Budget 2025 approaches, the real estate sector is eagerly anticipating key policy measures to boost growth, especially in affordable housing and infrastructure. Given that real estate contributes approximately 7% to India’s GDP, government interventions could significantly impact market dynamics, benefiting both developers and homebuyers.
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Key Expectations for the Real Estate Sector
1. Higher Tax Deductions on Home Loans
Industry experts are pushing for an increase in the tax deduction limit for home loan interest payments under Section 24(b) from the current ₹2 lakh to ₹5 lakh. This enhancement could make homeownership more affordable and encourage more buyers to invest in properties.
2. Granting Infrastructure Status to Housing
Developers are advocating for infrastructure status for the real estate sector. If granted, this could reduce borrowing costs, improve access to financing, and boost the supply of affordable housing projects.
3. Reintroduction of the CLSS Under PMAY
The revival of the Credit-Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana (PMAY) is being sought to support first-time homebuyers. Additionally, developers are urging the government to release centrally controlled land for affordable housing projects.
4. Revision of Affordable Housing Price Cap
The current cap of ₹45 lakh for affordable housing is considered inadequate, particularly in metropolitan cities like Mumbai and Delhi. Adjusting this limit based on market conditions would enable more homebuyers to avail of government benefits such as lower GST rates and interest subsidies.
5. Tax Benefits for REITs and Green Buildings
To encourage investment in Real Estate Investment Trusts (REITs), industry experts are recommending tax incentives. Additionally, promoting tax benefits for green-certified buildings could drive sustainable construction practices, benefiting both developers and end-users.
6. Recognition of Real Estate as an Industry
Granting industry status to real estate would enable developers to secure loans at lower interest rates. This move could reduce construction costs, improve project execution, and make housing more affordable for buyers.
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Potential Impact on the Real Estate Market
If these expectations are met, the real estate sector could experience significant growth in 2025. Increased affordability, better financing options, and enhanced infrastructure development could drive demand for both residential and commercial properties. Additionally, a focus on sustainable and green housing could make the sector more environmentally friendly.
Frequently Asked Questions (FAQs)
- How will the increase in home loan tax deductions benefit buyers?
Raising the tax deduction limit for home loan interest payments will reduce the overall tax burden on homeowners, making property ownership more affordable. - What is the significance of infrastructure status for real estate?
Infrastructure status will allow developers to access loans at lower interest rates, reducing project costs and making housing more affordable. - Will there be any changes in GST for real estate in Budget 2025?
While no official confirmation is available yet, industry experts are hoping for a reduction in GST on under-construction properties to boost sales. - How will the reintroduction of CLSS under PMAY help homebuyers?
CLSS provides subsidies on home loan interest rates for first-time buyers, reducing the financial burden and promoting homeownership. - Why is the ₹45 lakh affordable housing cap being reconsidered?
The current cap does not reflect market realities in metro cities, limiting benefits for homebuyers. Raising the cap would enable more people to access government subsidies. - What are REITs, and why are tax benefits important for them?
REITs are investment instruments that allow individuals to invest in income-generating real estate properties. Tax incentives could attract more investors, improving market liquidity. - Will there be more incentives for green buildings in Budget 2025?
The industry is advocating for tax incentives and subsidies for environmentally friendly buildings to promote sustainable development. - How will industry status impact real estate developers?
Industry status would provide developers with easier access to credit at lower interest rates, reducing construction costs and improving housing affordability. - What is the expected impact of the Budget on commercial real estate?
If tax benefits and infrastructure investments are introduced, the commercial real estate sector could witness increased growth and investment inflow. - Is it a good time to invest in real estate post-Budget 2025?
If favorable policies are introduced, the real estate market is expected to grow, making it a good time for investment in both residential and commercial properties.
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Conclusion
The Union Budget 2025 is expected to introduce key reforms that could significantly impact the real estate sector. With policy changes aimed at increasing affordability, improving financing, and promoting sustainability, both developers and homebuyers stand to benefit. Investors and homebuyers should stay informed about budget announcements to make well-informed decisions in the evolving real estate landscape.
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