A person purchasing an affordable house will now get an enhanced interest deduction up to Rs3.5 lakh with the union budget for 2019-20 granting an additional deduction of up to Rs1.5 lakh for interest paid on home loans borrowed up to March 2020.
The concessions for the affordable housing segment announced by finance minister Nirmala Sitharaman on Friday to allow an additional deduction of up to Rs1.5 lakh on interest paid on loans borrowed up to 31 March 2020 will be applicable to purchase of affordable houses valued up to Rs45 lakh.
“Therefore, a person purchasing an affordable house will now get an enhanced interest deduction up to Rs3.5 lakh. This will translate into a benefit of around Rs7 lakh to the middle class home-buyers over their loan period of 15 years,” the finance minister said while presenting her maiden budget.
The government has already announced a tax holiday for profits earned by developers of affordable housing. Also, interest paid on housing loans is allowed as a deduction to the extent of Rs2 lakh in respect of self-occupied property.
Besides, the finance minister announced proposed several reform measures for realisation of the goal of 'Housing for All' and affordable housing.
The finance minister also proposed that several reform measures would be taken up to promote rental housing. Current Rental Laws are archaic as they do not address the relationship between the lessor and the lessee realistically and fairly. A Model Tenancy Law will also be finalised and circulated to the states, she added.