The Union Budget 2025 has emerged as a game-changer for homebuyers, offering multiple tax benefits and incentives. From easing taxation policies to boosting affordable housing, the government’s initiatives are set to have a lasting impact on the real estate sector and homebuyers.

Be it tax reforms under the new tax regime or exempting second property from tax for notional rental income are some of the key announcements made by Finance Minister Nirmala Sitharaman on Saturday. Here is all homebuyers are going to get from Budget 2025:

Income Tax Reforms: More Savings, More Investments

One of the most significant takeaways from the budget is the increase in the tax rebate under the new tax regime. Individuals earning up to Rs 12 lakh per annum (Rs 12.75 lakh for salaried employees) will pay no personal income tax.

Adhil Shetty, CEO of Bankbazaar.com, says, “This move significantly enhances disposable income, allowing individuals to save more for housing investments. The simplified tax structure ensures that the middle class has more liquidity, leading to increased household consumption, savings and investments in equity and real estate.”

Also Read: ULIP Taxation: Budget 2025 removes ambiguity! Here’s how your ULIP proceeds will be taxed

With the revised income tax slabs and reduced tax rates, a rough estimate suggests that taxpayers could save up to Rs 10,000 per month, depending on their income bracket. “This significant boost in savings will enable individuals to better manage existing loans and enhance their loan eligibility, making homeownership and other large investments more accessible. For example, in the case of a home loan, assuming an interest rate of 9% and a tenure of 20 years, a person’s loan eligibility could increase by Rs 10-11 lakh. This is because the additional Rs 10,000 in disposable income can be utilized for servicing EMIs, making homeownership more accessible,” says Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution Pvt Ltd.

The ripple effect of increased disposable income will be felt across the retail loan industry, as more individuals will have the financial confidence to take on new loans, whether for housing, automobiles, or personal financing needs.

Tax-Free Second Homes

Budget 2025 eliminates all conditions by allowing two properties to be considered self-occupied, thereby removing the tax liability on notional rental income.

Shetty adds, “Homeownership is now more attractive as Budget 2025 allows taxpayers to claim nil valuation for two self-occupied properties. Previously, tax benefits were conditional, making it complex for homeowners to avail of the exemption. The removal of these conditions simplifies the process and encourages individuals to invest in second homes without worrying about additional tax burdens.”

For example, a homeowner living in Mumbai, who earlier had to pay tax on a deemed rental income per annum for a second home in Delhi, will now be exempt from this obligation, saving thousands in taxes and simplifying tax filing.

Higher TDS Threshold on Rent: A Win for Landlords and Tenants

Budget 2025 has increased the TDS deduction threshold on rent from Rs 2.4 lakh to Rs 6 lakh per annum. This change reduces the paperwork and compliance burden on tenants while ensuring a higher immediate cash flow for landlords.

For example, Rakesh Singh earns Rs 30,000 per month as rental income. Previously, his tenant had to deduct 10% TDS before paying rent, meaning he received only Rs 27,000. Now, with the revised threshold, there will be no TDS deductions, ensuring a seamless inflow of Rs 30,000 into his account.

SWAMIH Fund 2: Reviving Stalled Housing Projects

The Special Window for Affordable and Mid-Income Housing (SWAMIH) has already completed 50,000 housing units in stalled projects, providing relief to homebuyers who were paying EMIs for under-construction homes while renting elsewhere. Building on this success, the government has announced SWAMIH Fund 2, a Rs 15,000-crore blended finance facility supported by the government, banks, and private investors. The new fund aims to expedite the completion of another 1 lakh housing units, giving hope to thousands of families awaiting possession of their dream homes. Around 50,000 houses have already been completed and another 40,000 will be completed in FY 2025.

Budget 2025, thus, brings a big relief to homebuyers by reducing income tax liabilities, eliminating deemed rental income taxation, increasing TDS thresholds, and promoting affordable housing projects. With financial flexibility, simplified tax and government-backed initiatives for stalled projects, the budget sets the stage for a robust real estate market for homebuyers.