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Budget of 2021 is the Debt Financing in Real Estate to be Game Changer

Feb 05, 2021 | 2 minutes read | 0 Likes

Debt financing of real estate investment trusts (REITs) and infrastructure investment trusts (InVITs) announced in the Union Budget is awaited to be a turning point for the fundraising conditions in the real estate sector.

Ashoo Gupta, Partner, Shardul Amarchand Mangaldas & Co said: “Debt financing of real estate investment trusts (REITs) and infrastructure investment trusts (InVITs) will been permit by making a relevant amendment this can be a game changer for the fundraising exigency of these entities and thereby permit greater negotiation in consummate brownfield projects.”

Marketability
The government has also sustained its focus on the affordable housing segment by extension of the tax benefit by one year. Amid the prolonged pandemic scenario, this extension was needed to support the latent housing demand in the country. Further, the relaxation on tax compliance for REIT investors will enhance the marketability of such products considering we are likely to witness new REITs this year.

Income tax

"On the feature of housing demand, Section 80 C tax deduction on home loan principal repayment does not provide for a focused utility on housing. A individual annual deduction of INR 150,000 will contribute the much-needed fillip to opt for house purchase," says Shishir Baijal, chairman and MD, Knight Frank India.

To expand demand and provide comfort to home buyers, we presume tax rebates for them such as a emendation of the cap of Rs. 2 lakhs to a substantially steeper number on housing loans under section 24(b) of the Income Tax Act. This would result in increased savings and provide a boost in glade premium stocks. There is also a need for revising the inexpensive housing cap of Rs. 45 lakhs to a higher number considering the prices of land and construction in metro cities, says Ravindra Pai, MD, Century Real Estate.

LEASE

The term of exemption from levy of duty on notional rent, on unsold inventories, needs to be extended to 3-5 years from two after receiving the profession certificate

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