How the Real Estate Market Will Benefit from New Tax Reform: The most recent tax measures implemented by the union government are anticipated to significantly benefit the real estate industry when they go into effect on April 1, 2025. Major improvements are anticipated to improve affordability, encourage investment, and improve market attitude. These changes include an enhanced tax exemption limit, a new level of rental income TDS, TCS, and tax advantages on multiple self-occupied properties.

The largest effect would likely result from increasing the income tax exemption from Rs 7 lakh to Rs 12 lakh. This measure essentially exempts anyone earning up to Rs 12 lakh annually from paying taxes, giving them more money and lowering their housing costs. The tax exemption threshold for salaried taxpayers has been raised to Rs 12.75 lakh with the implementation of a Rs 75,000 standard deduction.

Significant Tax Reforms and Their Effects

Changes to the Rent Income TDS Limit

The TDS cap for rent income should be changed, according to the Union Budget 2025. It is suggested that the yearly ceiling be increased from Rs 240,000 to ₹600,000, or an effective Rs 50,000 per month. Both landlords and renters would find it easier to comply with tax laws thanks to the reform.

Two self-occupied properties are eligible for tax relief.

In the past, the taxpayer was only permitted to claim NIL yearly value for one self-occupied residence; the other properties were subject to taxation on the notional rent received. The proposed amendment reduces the amount of tax due and encourages investment in additional homes by allowing a maximum of two self-occupied homes to have an annual value of NIL.

These tax revisions have been well received by the real estate industry. The 3.3% increase in the Nifty Realty Index after the budget release resulted in notable gains for major real estate businesses, including Prestige Estates, DLF, and Sobha. According to analysts, the demand for luxury housing and cheap housing, especially in Tier 2 and Tier 3 cities, would be driven by the increased disposable income brought about by these tax cuts.

“These new tax provisions could not have come at a better time, as the real estate market is booming,” said Neeraj Sharma, Managing Director of Escon Infra Realtors. For homeowners, especially first-time purchasers, raising the income tax exemption ceiling to Rs 1,200,000 is a welcome respite since it gives them more purchasing power, allowing them to easily service EMIs or spend greater budgets. The new TDS cap on rental income provides a much-needed guarantee for investors, allowing landlords to better manage their profits. We may anticipate a surge in real estate transactions, increased investor confidence, and a favorable trend for both homeownership and the rental market with these comforting measures.”

Tirasya Estates co-founder Vansh Kataria emphasizes the advantages of these tax changes.

“Homebuyers should take advantage of the latest income tax revisions. Recognizing the changing demands of purchasers, particularly those who are investing in luxury houses or looking for a second home for future security, the tax exemption on two self-occupied properties has been granted. Furthermore, the change to TDS on rental revenue is a positive measure that will save landlords needless tax complications. According to Vansh Kataria, “as developers, we think these changes will have a positive impact on real estate sentiment, encouraging more buyers to invest without additional financial burden.”

The Real Estate Market’s Future

With more affordability, better transparency of rental revenue, and more purchasing options, real estate will expand quickly. These tax changes are expected to increase investor trust, spur real estate transactions, and establish real estate as India’s top investment choice.