Budget 2025: Tax Relief for Homeowners with 2 Properties

Budget 2025 brings relief for the middle class by exempting those earning up to Rs. 12 lakh under the new tax regime. It also introduces two major changes to simplify compliance.

Tax-Free Second Home – Homeowners can now claim nil valuation for two self-occupied properties instead of just one. 

Higher TDS Threshold on Rent – The TDS deduction limit on rent paid by non-individuals has increased from Rs. 2.4 lakh to Rs. 6 lakh, benefiting both tenants and landlords.  

These reforms ease taxation, encourage homeownership, and reduce financial strain. 

Earlier, homeowners could designate only one property as self-occupied, leading to taxation on ‘deemed rental income’ from additional properties—even if they were occupied by family. This created an unnecessary burden, as owners had to pay tax on a notional rental value despite earning no actual rent. 

Now, individuals can claim two self-occupied properties as tax-free, eliminating the tax on deemed income from a second home. This change promotes homeownership and supports real estate investment, particularly in second homes and smaller cities. 

Anuj Puri, Chairman of ANAROCK Group, highlights that allowing two self-occupied properties to be tax-free removes the tax burden on notional rental income. He believes this will boost homeownership and encourage investment in real estate beyond major urban centers. 

For example, Soumya Das, a Mumbai resident, owns two properties—one in Mumbai where he lives with his family and another in Kolkata where his parents reside. Under the revised rules, both are considered self-occupied, freeing him from paying tax on the Kolkata home’s deemed rental income.