by Propryte.com
The latest budget 2025 announcement brings great news for homeowners and property buyers in India. The government has revised the tax rules, allowing individuals to declare two properties as self-occupied instead of just one. This change eliminates the tax burden on notional rental income for those who own multiple homes but do not rent them out.
What Was the Rule Earlier?
Previously, if you owned more than one property, only one could be declared as self-occupied, meaning it was exempt from tax. Any additional property, even if it was not rented out, was considered “deemed to be let out,” and the owner had to pay tax on its notional rental income—the estimated rent it could fetch in the market.
What Has Changed?
Now, under the revised rule in Budget 2025, homeowners can declare two properties as self-occupied, removing the tax burden on notional rental income for both. This means individuals who own a second home for family visits, business trips, or future investment can now save on taxes.
Who Benefits from This Change?
This update is a major relief for:
✅ Homeowners with multiple properties – Those who have a second home for convenience or future use.
✅ Property investors – Encouraging investment in real estate by reducing the tax burden.
✅ NRI property owners – Many NRIs own a second home in India, which they don’t rent out but previously had to pay tax on.
Example Scenario: How This Helps Property Buyers
Imagine Mr. Arjun, a businessman who owns two houses—one in Chennai where he lives and another in Coimbatore, which he uses for work trips and vacations.
- Under the old rule, he could declare only one home as self-occupied, while the second property would be taxed based on its notional rental income.
- Under the new rule in Budget 2025, both houses can be self-occupied, and he will not have to pay tax on the second property’s notional rental income.
This change results in significant tax savings for Arjun, making property ownership more attractive.
How This Affects the Real Estate Market
With reduced tax liability, more individuals may consider purchasing a second home, boosting demand in the real estate sector. This could especially benefit tier-2 and tier-3 cities, where people often buy homes for future use or retirement.
Planning to Invest in Property?
If you’re considering buying a second home, check out our latest insights on:
Final Thoughts
This tax relief is a positive step for property buyers and homeowners in India. Whether you are planning to invest in real estate or already own multiple properties, this change will help you save on taxes and make property ownership more affordable.
