In a significant move announced on February 1, Finance Minister Nirmala Sitharaman relaxed the conditions for tax relief on self-occupied properties in the Union Budget 2025. Taxpayers can now claim tax benefits for two self-occupied houses, a major change from the previous rule that allowed relief for only one property.
“Presently tax-payers can claim the annual value of self-occupied properties as nil only on the fulfilment of certain conditions. Considering the difficulties faced by taxpayers, it is proposed to allow the benefit of two such self-occupied properties without any condition,” the Finance Minister announced in her budget speech.
This reform significantly eases the tax burden for individuals who own and live in multiple properties, offering financial flexibility and promoting homeownership. By acknowledging the diverse housing needs of families, this decision not only provides greater tax relief but also encourages real estate investment. The move aligns with the government’s broader focus on financial empowerment and ease of living, strengthening the middle class while simplifying the tax structure,” said Adhil Shetty, CEO of Bankbazaar.com.
This is a positive move also for residential real estate investment. The simplified TDS on rent decreases the compliance burden and enhances liquidity for landlords and will positively impact the rental housing market, especially in metro cities. Previously, homeowners could claim only one self-occupied property as tax-free; now, they can claim two – thereby removing taxation on notional rental income from a second home.
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