Budget Impact for Home Buyers

Overall, a lackluster budget for the economy but no shocks! The middle class can celebrate a bit with the Income Tax slabs now helping them to fight the inflation. Believe me, the inflation rate will make sure that most of the tax savings will go towards meeting higher prices.
Here are some predictions and suggestions for home buyers specifically:
1. Nothing concrete has been done for the high prices in Metros. So don’t expect the prices to fall.
2. Interest rates will not rise, and that will be good for existing borrowers.
3. People will have more in-hand salaries from April, to the tune of around 4K per month. This means they can borrow around 5 Lacs more for buying their home. Is this what the builders were waiting for? It will be interesting to see what this does to prices in the 30-50 lac mid range houses.
4. Interest rate subsidy of 1% extended to Rs 10 lac loans. Now this is good news for those who want to invest in a second home. Think of buying a sub 20 lac home, with a 10 lac loan, in the name of your spouse perhaps? Getting 1% extra subsidy is equivalent of earning 1% more on your investment, and over years, this can really add up.
5. FM has extended some tax benefits to builders, but it is unlikely that the builders will pass on any benefits to buyers.
6. More disposable income in the hands of people will also mean rents may go up a bit, and people may also look at upgrading their rented houses.

7. Service tax will now be applicable on payments before construction, and on various things like society club membership. This is likely to increase the costs around 4% right away. Btax uyers must ask justification for any charges towards this.

So those who are waiting on the fringes to buy their own home, may consider acting if they find something feasible. And for those who want to buy for investment, may like to look at smaller properties.

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