Chennai: Revenue collections from property registrations touched a new high in February 2023 despite an eight percent drop in the volume of registrations. This indicates that sales of luxury homes went up as buyers hurriedly made purchases before the new cap on long-term capital gains tax (LTCG) comes into effect on April 1.
Total revenue collected through stamp duty and registration fees in Mumbai in February 2023 was over Rs 1,102 crore against Rs 615 crore in the year-ago month.
However, the total number of property registrations saw a drop of 8 per cent in the year — from 10,379 in February 2022 to nearly 9,511 registrations in February 2023.
“Interestingly, even while revenue collections went up significantly in the period in Mumbai, the total number of property registrations saw a drop of 8% in the year… This clearly indicates that the sale of big-ticket price homes saw significant movement,” said Anuj Puri, chairman, Anarock Group.
One major factor for high sales of big-ticket price homes in Mumbai and other top cities could be the government’s recent move in the Union Budget 2023-24 to cap capital gains at Rs 10 crore. This new move will come into effect from April 2023.
In order to save tax on capital gains, the HNIs across top cities including Mumbai are hurriedly closing luxury housing deals before the financial year ends in March.
Under this new move, if one sells a house or other assets including equities and the gains are more than Rs 10 crore, then maximum benefit that can be availed is only up to Rs 10 crore when invested into another property. Capital gains of over Rs 10 crore will be taxed from April 2023.
Previously, to save on tax from their capital gains, HNIs and ultra-HNIs would mostly re-invest into ultra-luxury property. Thus, the new move could be a deterrent for luxury housing sales to an extent once the new provision comes into effect. However, to say that it will have a major impact on this segment will remain to be seen, said Puri.
