In Budget 2025, Finance Minister Nirmala Sitharaman announced significant relief for homeowners by changing the tax exemption rules for self-occupied houses.
Taxpayers can now claim tax exemption on two self-occupied houses instead of just one, which was the limit earlier.
During the budget speech, the Finance Minister explained, “Previously, taxpayers were allowed to show the annual value of one self-occupied property as zero under certain conditions. Now, this exemption will apply to two houses without any conditions.”
This change is expected to benefit those with multiple homes, reducing their tax burden and making homeownership more accessible.
Impact on Homeowners and Real Estate
Experts believe this move will encourage homeownership and boost investment in the real estate sector.
Adhil Shethi, CEO of BankBazaar.com, stated, “This step simplifies the tax system for the middle class
and provides greater financial flexibility. It also reflects the diverse needs of homebuyers.”
Additionally, the government has simplified the process of tax deduction at source (TDS) on rented properties. T
his change will reduce tax compliance burdens for homeowners and is likely to increase the availability of rental homes, particularly in metro cities.
The new rule eliminates tax on notional rental income for a second home, further relieving taxpayers.
Real estate professionals see this as a game-changer for smaller cities as well.
Anuj Puri, Chairman of ANAROCK Group, said, “This decision will ease the tax burden for middle-class buyers, landlords, and investors.
It will also strengthen the real estate sector and boost demand for homes, especially in Tier-2 and Tier-3 cities.”
