Indexation benefit removal in real estate will deter sellers in the secondary market
real estate sector has cautioned the government that the proposal to remove indexation benefits for long-term capital gains in real estate will hurt the growth of the sector.
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«The removal of the indexation benefit for long-term capital gains in real estate is likely to significantly impact property owners' holdings assets for more than ten years. Owners of heritage homes may face a higher tax burden upon sale, as the absence of indexation prevents adjusting the property's cost basis for inflation. The change could result in higher taxes for individuals who want to sell assets held for more than ten years» said Niranjan Hiranandani, Chairman, NAREDCO.
The budget 2024-25 has proposed a flat budget 2024-25 of 12.5 per cent on capital appreciation on selling a property with no indexation benefits.
However, the Income tax department does not agree with the views of Hiranandani. In a social media post on Wednesday, the Income tax department denied this that people will have to pay higher taxes on profits made on selling a house on the premise that nominal real estate returns are generally in the region of 12-16 per cent per annum, much higher than inflation rate of 4-5 per cent.
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