To help readers keep pace with what’s happening in the real estate sector, Mint’s Q&A will appear every other Monday.
I want to purchase a plot of land. I will be building a house on it, but that would be some time later. I want to know whether I can avail of tax benefits if I apply for a loan for the purchase of a plot or whether tax benefits are applicable only for flats and fully constructed houses?
No tax benefits are available on a loan taken for buying a plot of land.
Renu Sud Karnad
However, if you take a loan for the purpose of construction, that is, a loan to build a house on that plot of land, then you would be eligible for tax benefits offered by the government.
I plan to buy a 1,000 sq. ft house located at Banaswadi in Bangalore. I am planning to apply for a housing loan for this purpose. Is it true that the Reserve Bank of India’s recent interest rate hike could further dampen the real estate market and thus push down property rates in the near future?
There could be a marginal reduction in property prices, ranging between 5% and 15%, over the next few months, and not a collapse, as expected by many. Developers carrying an inventory of high-end properties may consider lowering prices in order to increase sales.
There is a slowdown in sales in the higher-end segment because of the absence of investors.
Home buyers who plan to buy a house for self-occupation need not worry. In fact, this could turn out to be a good opportunity where you could buy a flat of your choice.
And just to add to this, it is not always possible to time the market correctly. So, while the times could be difficult for the developers, it may be the best time for people to hunt for, and find, a house of their choice.
Renu Sud Karnad is joint managing director, HDFC. Readers may write in with their queries and comments to firstname.lastname@example.org