Let’s dive deeper with Sidhant Gupta, former director of Kwality, and discuss the key highlights in the 2025 budget for the real estate sector.
The 2025 budget for the real estate sector emerges as a pivotal moment, reflecting the government’s commitment to fostering growth and stability within this vital industry. As one of the key drivers of economic development, the real estate market is poised for significant transformation, with expectations of increased investment and innovation.
This budget is seen as a crucial step in addressing long-standing challenges while capitalizing on emerging opportunities, positioning real estate as a cornerstone of India’s economic landscape. With a focus on infrastructure development and enhanced buyer sentiment, the stage is set for a dynamic year ahead, promising to invigorate both residential and commercial segments.
In a strategic move to empower middle-class homebuyers, Finance Minister Nirmala Sitharaman announced on February 1, 2025, that individuals earning up to ₹12 lakh annually will no longer be subject to income tax, effectively raising the threshold to ₹12.75 lakh when accounting for standard deductions.
This significant increase in disposable income is expected to enhance the purchasing power of families, stimulating demand in the housing market and invigorating the real estate sector. With more financial resources at their disposal, middle-class buyers are likely to show greater interest in home purchases, driving growth and investment in real estate.
The recent allocation of ₹15,000 crores to the newly established SWAMIH Fund 2 aims to provide essential relief to countless homebuyers facing delays in their real estate projects. This initiative is set to facilitate the completion of an additional 1 lakh housing units, building on the success of the original SWAMIH scheme, which has already delivered 50,000 completed dwelling units and has another 40,000 in progress.
“The government’s commitment to resolving the housing crisis is evident in this strategic funding, which not only addresses the immediate needs of homebuyers but also reinforces confidence in the real estate sector’s recovery and growth.” Believes Sidhant Gupta, former director of Kwality.
Budget 2025 has introduced a game-changing provision for homeowners by allowing two properties to be classified as self-occupied, thus eliminating the tax liability on notional rental income. Sidhant Gupta notes, “Homeownership is now more appealing since taxpayers can claim nil valuation for both self-occupied properties.” Previously, tax benefits were laden with conditions, complicating the exemption process for homeowners. By removing these stipulations, the government simplifies the landscape, encouraging individuals to invest in second homes without the fear of incurring additional tax burdens.
For instance, a homeowner residing in Delhi who previously faced taxes on deemed rental income from a second home in another city can now breathe easy, as they will be exempt from this compulsion, resulting in significant savings and a streamlined tax filing experience.
In addition to this, the Budget has increased the TDS threshold on rental income from ₹2.4 lakh to ₹6 lakhs per annum. This substantial rise reduces the compliance burden for tenants while simultaneously enhancing cash flow for landlords. These measures not only make property ownership more attractive but also foster a more vibrant rental market, ultimately benefiting both homeowners and investors alike.
Sidhant Gupta says, “These measures offer a substantial sigh of relief for those fortunate enough to own second homes and collect rental income, particularly for the savvy investor-owners among us. With these tax changes, the government is essentially giving a green light to expand the rental market, opening up new avenues for housing opportunities. It’s a delightful invitation for those looking to capitalize on their property portfolios. Who knew that owning multiple homes could come with such enticing perks?”
Overall, the Budget’s focus on simplifying tax regulations and increasing disposable income positions it as a pivotal moment for both current homeowners and potential buyers. As families navigate their housing needs across different locations for work or personal reasons, these changes are likely to drive a significant uptick in real estate demand and investment.
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