The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduced key tax reforms benefiting homeowners, landlords, and real estate investors. Among the major announcements was the provision allowing taxpayers to claim Nil valuation for two self-occupied properties instead of just one, significantly reducing the tax burden on second-home owners.
1. Tax Relief on Two Self-Occupied Homes
Previously, homeowners could only claim tax benefits for one self-occupied property, while a second home was taxed based on notional rental income. The new reform eliminates this additional tax, encouraging homeownership and real estate investments in both metro cities and Tier 2 and Tier 3 locations.
Adhil Shetty, CEO of Bankbazaar.com, highlighted this as a game-changer for homeowners:
"By allowing tax relief on two properties, the government acknowledges the diverse housing needs of families and strengthens the middle class while simplifying tax obligations."
The budget raised the annual TDS limit on rent from ₹2.40 lakh to ₹6 lakh, reducing compliance burdens for tenants and landlords. This move enhances liquidity in the rental housing market, particularly benefiting urban tenants and property investors.
Taxpayers now have up to four years—instead of the previous two-year window—to update or correct their tax returns. This extension provides greater flexibility and reduces the risk of penalties due to delayed corrections.
The exemption threshold under the Liberalised Remittance Scheme (LRS) has been increased from ₹7 lakh to ₹10 lakh, making it easier for individuals to send money abroad without additional tax collection at the source.
These reforms are expected to boost real estate investments by:
Anuj Puri, Chairman of ANAROCK Group, emphasized the sector-wide benefits:
"The Budget 2025 tax reforms minimize financial pressures, promote homeownership, and make real estate investments more accessible, giving a strong boost to the housing sector."
Final Thoughts
The Budget 2025 brings much-needed relief to taxpayers, particularly homeowners and real estate investors. With tax-friendly policies, simplified compliance, and enhanced liquidity, these reforms will shape a more robust and accessible housing market in India.
Are you thinking about buying your second home? Now’s the time to invest with these tax benefits!
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