35-year-old IT professional Rohit Basu has been saving up for his dream home. Every year, he anxiously waits for the Union Budget, hoping for policies that will make homeownership easier.
In 2025, the government’s Budget announcements have finally given homebuyers like Rohit new hope. With tax benefits, increased affordability, and infrastructure growth, homebuyers are hopeful of a brighter future.
So, why is the latest Union Budget drawing significant applause from homebuyers? Let’s dive in.
Major New Measures in the Union Budget 2025-26 for Property Buyers
Higher Tax Exemption Limits
The revision of the personal income tax limit in Budget 2025-26 has brought joy to India’s middle class. The exemption limit has been raised from ₹7 lakh to ₹12 lakh per year, allowing homebuyers to retain more disposable income and access affordable housing with greater ease.
With the ability to save more, property seekers like Rohit can set aside a larger portion of their earnings for down payments without tax concerns. This increased financial stability also enables buyers to explore options beyond affordable housing. Additionally, higher disposable incomes are expected to drive a rise in home loan approvals.
Tax Exemption on Second Property
This budget brings good news for those considering a second property. It offers tax exemptions on two self-occupied properties, provided neither is rented out. This move encourages more people to invest in a second home without hesitation, benefiting both realtors and homebuyers.
With a second self-owned property now tax-free, individuals with different investment goals are more likely to purchase an additional residential property. Many will look toward suburbs and tier-2 and -3 cities, using these homes as vacation retreats. Others may buy a second property with plans to sell it later, capitalizing on future market opportunities.
Enhanced Focus on Infrastructure Development
Strong infrastructure growth is a prerequisite for the real estate sector’s expansion. Fortunately, Budget 2025-26 has made a significant allocation toward urban infrastructure development.
A ₹1 lakh crore Urban Challenge Fund has been introduced to drive smart city initiatives, improve public transport, create green spaces, and enhance civic amenities. Additionally, a ₹10 lakh crore Asset Monetization Plan aims to unlock government-owned real estate assets, providing private investors with greater opportunities to develop urban projects.
These ambitious initiatives will improve urban living conditions, making developing cities and suburbs more attractive for homebuyers in the near future.
Revised TDS limit on Rent
Property owners can breathe a sigh of relief as the new budget raises the TDS exemption limit on rental income from ₹2,40,000 to ₹6,00,000 per year. This change is particularly beneficial for senior citizens and landlords, especially in metro cities, as it reduces tax deductions on their rental earnings.
For instance, a retired homeowner who earns ₹5,50,000 annually from a rented apartment will now receive the full amount without TDS deductions, whereas earlier, a portion would have been withheld. This increase in disposable income encourages landlords to invest in new rental properties or renovate and expand existing ones, ultimately boosting the real estate sector.
The Effect on Commercial Real Estate
The new policies announced in the Budget 2025-26 focus more on residential property buyers, but that does not mean the commercial segment has been left out. A hike in MSME funding and relaxed FDI norms is expected to boost the demand for industrial spaces.
With people enjoying more disposable incomes, the investment in shopping complexes and retail zones will increase. The same applies to the demand for hybrid workspace setups in and around the metro cities.
A Look at the Future of the Real Estate Sector in India
With Budget 2025-26 providing a major boost, the Indian real estate sector is set for significant growth. Favourable tax exemptions are expected to drive a surge in property purchases, attracting a new wave of homebuyers, including younger buyers like Rohit.
The rapid expansion of urban infrastructure will fuel property development in suburbs and smaller cities, creating more opportunities for homeownership and investment. Additionally, the revised TDS limit on rental income will strengthen the rental housing market, benefiting landlords and tenants alike. Overall, this Budget brings positive news for homebuyers and signals a promising future for the real estate sector.
