2025 Union Budget Impact: Tax Benefits, Property Rates & Homebuyer Relief

The 2025 Union Budget has introduced key reforms that will impact homebuyers and property tax rates. These changes are expected to boost the real estate sector, enhance affordability, and provide relief to property owners. Let’s explore the key takeaways in a simple and clear manner.

1. Increased Income Tax Benefits for Homebuyers

One of the biggest concerns for first-time homebuyers is managing finances while purchasing a property. The 2025 Budget has introduced the following benefits:

• Higher Tax Rebate: The rebate under the new tax regime has been increased, allowing individuals earning up to ₹12 lakh per year to pay no income tax.
• More Disposable Income: With higher savings, homebuyers will find it easier to pay home loan EMIs or make down payments.
• Enhanced Home Loan Interest Deductions: The Section 24(b) deduction for home loan interest has been increased, encouraging more people to invest in residential properties.

2. No Tax on Second Self-Occupied Property

Earlier, individuals owning more than one house had to pay tax on notional rental income from the second property. The 2025 Budget has removed this tax liability for up to two self-occupied properties. This change will benefit homeowners with a second home in their hometown or for future investment.

3. Higher TDS Threshold on Rental Income

For those earning rental income, the government has increased the TDS (Tax Deducted at Source) threshold from ₹2.4 lakh to ₹6 lakh per year. This means landlords earning up to ₹50,000 per month in rent will not have TDS deducted, making property rental more tax-efficient.

4. Relief for Stalled Housing Projects – SWAMIH Fund 2

Many homebuyers face delays in possession due to stalled real estate projects. To address this issue, the government has introduced SWAMIH Fund 2, a ₹15,000 crore initiative to help complete delayed housing projects. This move will ensure homebuyers get their properties on time and boost confidence in the real estate sector.

5. ₹1 Lakh Crore Urban Infrastructure Boost – A Game Changer

A well-planned city with good infrastructure increases property value. The Urban Challenge Fund, with an allocation of ₹1 lakh crore, will focus on:

• Developing sustainable housing projects
• Improving public transport networks
• Advancing smart city developments
• Enhancing overall urban planning These initiatives will benefit homebuyers by improving the quality of life in urban areas and increasing real estate investment potential.

6. Property Tax Reforms – Lower Burden on Homeowners

Property tax rates in various states are expected to be restructured following the budget announcements. Key changes include:

• Standardized Property Tax System: A uniform framework to ensure transparency in property taxation.
• Rebates for Senior Citizens and Women: Additional property tax benefits for these categories.
• Incentives for Green Buildings: Properties following sustainable building norms may receive tax discounts, encouraging eco-friendly housing developments.

7. Affordable Housing Push – PMAY-U 2.0

The government has expanded the Pradhan Mantri Awas Yojana - Urban (PMAY-U) 2.0 to provide affordable housing to one crore families. This initiative aims to:

• Reduce the cost of housing for middle and lower-income groups
• Increase government subsidies for first-time homebuyers
• Provide incentives to builders for affordable housing projects

A Positive Outlook for Homebuyers and Property Owners

The 2025 Union Budget has introduced significant reforms that will benefit homebuyers, landlords, and real estate investors. With higher tax rebates, home loan incentives, rental income benefits, and urban development initiatives, the real estate sector is set for strong growth. These changes will make homeownership more affordable and create a stable and transparent property market.

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