What Has Changed?

Previously, under the Income Tax Act, if an individual owned more than one property but did not rent it out, they were still required to pay tax on notional rental income—essentially, a tax on the assumed rent they could have earned. The new policy eliminates this tax on a second self-occupied home, providing significant relief to homeowners and investors.

Industry Reactions

Experts from the real estate industry have welcomed this move, highlighting its potential impact on homebuyers and the housing market.

Domnic Romell, President, CREDAI-MCHI

“The move to allow taxpayers to claim the annual value of two self-occupied properties as nil is a significant step. Previously, homeowners could claim tax exemption on only one self-occupied property, while additional properties were subject to tax—even if they were not rented out. This progressive reform provides substantial tax relief, encourages homeownership, and acknowledges the evolving housing needs of Indian families.”

Anuj Puri, Chairman – ANAROCK Group

“This change is a positive move for residential real estate investment. By allowing homeowners to claim Nil valuation for two self-occupied properties, the government has removed the burden of taxation on notional rental income from a second home. This step minimizes tax pressures, promotes homeownership, and facilitates real estate investment, particularly in second homes and Tier 2 and 3 cities.”

What This Means for Homebuyers and Investors

1. Encourages Real Estate Investment – With the removal of tax on the second self-occupied property, more individuals will be inclined to buy a second home—whether as an investment or a weekend retreat.
2. Boosts Housing Demand – The reform is expected to increase demand for housing, particularly in Tier 2 and Tier 3 cities, where second-home purchases are on the rise.
3. Supports Long-Term Financial Planning – Buyers can now own multiple properties for personal use without worrying about additional tax burdens, making real estate a more attractive long-term asset.
4. Strengthens Rental Markets – Although the exemption applies to self-occupied properties, it reduces financial constraints on property owners, which could lead to a more flexible and dynamic rental market.

Final Thoughts

The exemption on notional rental income for two self-occupied properties is a pro-consumer, pro-real estate move that will benefit middle-class homebuyers, investors, and the housing sector as a whole. With growing urbanization and increasing aspirations for homeownership, this policy change is expected to have a lasting impact on India’s real estate landscape.

For those looking to purchase a second home, now might be the best time to invest.

Also Read: Affordable Housing Crisis: Will Budget 2025-26 Turn the Tide?

The post New Tax Exemption on Two Self-Occupied Properties: A Game-Changer for Homebuyers and Investors appeared first on Square Feat India.

Key Budget Highlights Impacting Real Estate

• Zero Income Tax Up to ₹12 Lakh: This move is expected to boost disposable income and increase housing demand, particularly in the affordable and mid-income segments.
• ₹1 Lakh Crore Urban Challenge Fund: Aims to transform cities into economic hubs, supporting infrastructure and real estate growth in Tier 1 & Tier 2 cities.
• ₹15,000 Crore SWAMIH Fund 2.0: Expected to revive 1 lakh stalled housing units, benefiting homebuyers and developers facing liquidity constraints.
• TDS on Rental Income Increased: Raising the TDS limit on rent from ₹2.40 lakh to ₹6 lakh will ease compliance burdens and improve rental housing investments.
• Tax Exemption on Two Self-Occupied Properties: Homeowners can now claim tax benefits on two properties instead of one, reducing tax burdens and promoting real estate investments.
• Expansion of GCCs in Tier-2 Cities: Will drive commercial real estate demand in emerging cities, boosting office space and warehousing needs.
• Digitization of Land Records: Expected to enhance transparency and efficiency in real estate transactions, boosting homebuyer confidence.

Industry Reactions

Dr. Niranjan Hiranandani, Chairman, NAREDCO & Hiranandani Group

The budget strengthens infrastructure investment and real estate demand, with the SWAMIH Fund 2.0 ensuring the completion of stalled projects. However, inadequate long-term investment and the absence of affordable housing incentives remain concerns.

Domnic Romell, President, CREDAI-MCHI

The increase in income tax exemption and rental TDS limits will benefit middle-class homebuyers and landlords. The SWAMIH Fund’s expansion is a welcome move, but further policy reforms, including GST rationalization, are needed to unlock the sector’s full potential.

Prashant Sharma, President, NAREDCO Maharashtra

While tax relief and urban development initiatives are positive steps, the budget lacks direct incentives like industry status and single-window clearances that could have accelerated real estate growth.

Badal Yagnik, CEO, Colliers India

The budget furthers the vision of ‘Viksit Bharat’ with reforms in urban development, taxation, and regulatory frameworks. The SWAMIH Fund extension and Urban Challenge Fund will accelerate real estate growth, while rationalized taxes will spur investments in residential real estate and REITs.

Shrinivas Rao, CEO, Vestian

The budget’s focus on employment generation, infrastructure, and increased disposable income will drive demand across all real estate segments. Additionally, the SWAMIH Fund and digitization of land records will strengthen homebuyer confidence. Infrastructure upgrades, particularly in air cargo, will fuel warehousing demand nationwide.

Piyush Bothra, Co-Founder & CFO, Square Yards

The zero-tax provision up to ₹12 lakh will boost homebuyers’ purchasing power. The ₹15,000 crore SWAMIH Fund is a crucial intervention for stalled projects, but increased home loan deductions could have further enhanced affordability and eased credit constraints.

Rohan Khatau, Director, CCI Projects

Infrastructure spending and PPP initiatives are welcome, but key reforms such as stamp duty rationalization and higher home loan interest deductions were expected. The sector may require mid-year policy interventions.

Vikas Sutaria, Founder, Irah Lifespace

The budget lacks incentives for NRI and HNI investments in luxury real estate. While TDS rationalization helps, easing investment norms for these segments could have further boosted the sector.

Shraddha Kedia-Agarwal, Director, Transcon Developers

The Urban Challenge Fund and infrastructure-focused projects will drive growth, but the real estate sector still needs tax rebates and industry status for sustained expansion.

Samyak Jain, Director, Siddha Group

The revamped tax structure and middle-class benefits will increase disposable income, empowering homebuyers and fueling sectoral growth.

Abhishek Jain, COO, Satellite Developers

The budget’s emphasis on urban development and tax relief is positive, but liquidity issues, taxation burdens, and policy hurdles remain. A more comprehensive real estate policy is required.

Manju Yagnik, Vice Chairperson, Nahar Group & Senior VP, NAREDCO Maharashtra

The budget strengthens economic resilience with its focus on infrastructure. However, a targeted housing policy and tax incentives would have further fueled real estate growth.

Rajiv Agrawal, Co-Founder, Saarathi Realtors

The tax relief and SWAMIH Fund 2.0 will make homeownership more accessible, unlocking new investment opportunities in real estate.

Anuj Puri, Chairman, ANAROCK Group

The budget focuses on economic growth, consumption, and infrastructure but lacks major announcements for affordable housing, leaving stakeholders hoping for mid-year interventions.

Conclusion

The Union Budget 2025-26 introduces significant tax relief and urban development initiatives, indirectly benefiting the real estate sector. However, industry experts believe the absence of direct incentives—such as higher home loan deductions, single-window clearances, and GST rationalization—limits the sector’s full growth potential. While the middle class gains from tax relief, developers and investors look forward to further structural reforms to sustain long-term real estate momentum.

Also Read: budget expectations for real estate

The post Budget 2025: Tax Relief on Two Homes, ₹15,000 Cr SWAMIH Fund & Urban Growth Push Real Estate Forward appeared first on Square Feat India.