Now, you can claim nil annual value for two self-occupied properties, saving money and cutting compliance hassles

Big income tax relief for these property owners in Budget 2025

This year’s Budget will leave a smile on your face if you own more than one property. You can now claim nil annual value for up to two self-occupied properties. This means simpler tax compliance and more money in your pocket.

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Earlier, owning a second property for personal use came with a tax headache. You had to pay tax on the second house even if you hadn’t rented it out. This tax was calculated on expected rent that you could have received during the year. If work took you to another city and you lived in a rented house, you had to prove that your first property was self-occupied just to claim tax relief.

This Budget eliminates these conditions. Ravi Shankar Singh, MD of Residential Transaction Services at Colliers India, explains, “Previously, the taxpayers had to justify the non-occupation of second property, usually for employment or business reasons. Removing this requirement reduces compliance hassles.”

How much tax will you save?

Assuming a rent of Rs.25,000 per month from second property

Delhi-based Chartered Accountant Manoj Pahwa agrees. “If you are not actually living in your property, you benefit to a great extent now. There is no need to provide proof for work relocations. It’s a huge relief, especially for professionals juggling jobs across cities.”

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Taxpayer savings
Take Delhi-based legal professional, Abhijeetam Upadhyay. He used to pay around `10,000 per month as tax on his unoccupied house in Gurugram. “Now, I get to pocket that money,” he says with a smile. “The benefits of this move extend beyond financial terms. It will encourage parents like me to invest their hard-earned money in buying a house for their children in advance,” he adds.

For some, the savings are even more substantial now. “I used to pay Rs.65,520 annually as tax on deemed rental income. This change has brought me significant savings,” says Chartered Accountant Sachin Garg. “The annual value for determining income from my second property was approximately Rs.9 lakh, which will not be offered to tax as per the new provision,” shares Noida-based Mukul Mathur. “This means I get to save close to Rs.1.8 lakh in tax on this property.”

This change is not just a win for your wallet, but also for the real estate market as experts see a positive outlook ahead for the industry.

The reform is expected to encourage investment in the residential real estate. Anuj Puri, Chairman of ANAROCK Group, remarks, “This will spur homeownership and investment in both primary and secondary housing markets.”

It is also likely to encourage the purchase of vacation homes and secondary residences for many homebuyers. Sandeep Ahuja, CEO of Atmosphere Living, comments, “Earlier, taxation made owning a second house less attractive. Now, taxpayers can enjoy their holiday homes without the financial penalty, making such investments more appealing for them.”

The removal of tax on deemed rental income solves a problem that has been debated for years. “This change is expected to enhance affordability for homebuyers, support the rental housing market, as well as fuel the demand in tier 2 and tier 3 cities in the country,” adds Puri.

This story originally appeared on: India Times - Author:Faqs of Insurances