Budget 2025 Brings Relief For Homeowners With Multiple Properties

Budget 2025 has brought some good news for homeowners who own more than one property. Before this, if an individual had two properties, only one property could be considered as self-occupied. If someone has a second property, it will be ‘deemed to earn rental income’ even if it is not given for rent. So, if a homeowner is not earning any rent from the second property ( if it is vacant or occupied by family members), he still has to pay tax on the notional rental value. This would lead to an unnecessary tax burden. 

Budget 2025 says that a person can claim two properties as self-occupied property. Therefore there is no concept of notional rent on a second property anymore. So if someone has a second property that is vacant or occupied by family members, one does not need to pay any tax on the notional income. 

This move will reduce tax pressures and promote real estate investments, especially in tier 2 and tier 3 cities. 

Take the example of Mumbai-based Sohail Khan, who owns two properties in Bangalore and Delhi. He lives with his family in Mumbai, while his parents stay in another property he owns in Delhi. So both his properties are self-occupied. 

The property in Delhi is considered to have a deemed rental income of Rs 50,000 a month or Rs 6 lakh a year. Earlier, Khan had to pay a tax of Rs 6 lakh. However, he does not receive any money from that apartment as rent. 

Since budget 2025 states that two properties can be considered self-occupied, Rs 6 lakh will no longer be considered rental income. Thus, Khan will not only save taxes but also avoid calculating and reporting the deemed rental income. 

This move will benefit those who have multiple properties, and who have a property in one city but are staying in another city for work purposes. It will also benefit those who own two properties and one is lived in by the parents. 

Budget 2019 allowed taxpayers to claim two properties as self-occupied. The annual value could be considered nil only if the property was used for personal residence or if one could not occupy it for reasons such as business, employment, and so on elsewhere. This used to lead to confusion, as the IT department often questioned taxpayers about why they could not occupy the property.