New Delhi: The Union Budget 2025 has introduced a major relief for homeowners by granting a tax exemption on a second home. Previously, homeowners were required to pay tax on the notional rental income of a second property, even if it was not rented out. This new provision removes that financial burden, offering significant benefits to property owners.
Finance Minister Nirmala Sitharaman, while presenting the budget, announced that the tax exemption on a second home aligns with the government’s efforts to support homeownership. Under the amended tax regulations, taxpayers can now claim a nil annual value for two self-occupied houses, ensuring they do not have to pay tax on deemed rental income.
Experts believe that this move will encourage real estate investment, particularly in metro cities and tier-2 locations. The tax exemption on a second home is expected to boost demand in the housing sector, as more individuals may consider purchasing a second property for personal use or as a long-term investment. The real estate industry has welcomed this change, with stakeholders highlighting its potential to reduce tax liabilities and increase affordability for middle-class buyers.
Market analysts suggest that the tax exemption on a second self-occupied home will also improve liquidity in the sector. With more homebuyers likely to invest in additional properties, developers and financial institutions could see increased interest in housing loans and residential projects. This reform, alongside other budgetary measures, is likely to stimulate economic activity and strengthen the housing market.
The exemption on a second self-occupied home also comes as a relief to individuals who own properties in different locations due to work commitments or family needs. Previously, many homeowners were discouraged from acquiring a second property due to the additional tax burden. Now, with the exemption in place, owning multiple properties for self-use has become more financially viable.
The Union Budget 2025’s decision to grant an exemption on a second self-occupied home reflects the government’s commitment to easing financial constraints on taxpayers and fostering growth in the real estate sector. By eliminating the tax on notional rental income for a second property, the government has provided substantial relief to homeowners and investors, ensuring a more favorable environment for property ownership and investment.
