IS BUDGET 2025 FAVOURABLE FOR REAL ESTATE MARKET ?

The Union Budget 2025 has proven to be a turning point for homebuyers, introducing several tax benefits and incentives. Be it tax reforms under the new tax regime or exempting second property from tax for notional rental income are some of the key announcements made by Finance Minister Nirmala Sitharaman. By simplifying tax policies and promoting affordable housing, the government’s initiatives are set to create a lasting impact on both the real estate sector and homebuyers.

Impact of Budget 2025 on the Hyderabad Real Estate Market

Affordable Housing & Middle-Class Benefits

Tax incentives for affordable housing projects will make homeownership more accessible. Additionally, government investment in urban infrastructure will improve connectivity to affordable housing locations, enhancing property values and making homeownership a viable option for many

Rental Market & Investment Growth

TDS on rental income has been raised from ₹2.4 lakh to ₹6 lakh, reducing tax burdens on landlords and keeping rent prices stable.

Commercial Real Estate Boom

Tax benefits for IT and startup hubs will encourage more companies to set up offices, driving demand for Grade A office spaces in Hyderabad. Government incentives for warehousing and data centres will push commercial real estate expansion.

Favourable Policies for NRIs & Investors

With the rupee weakening, NRIs have a unique opportunity to maximise their purchasing power in real estate market. Rapid infrastructure growth and strong rental demand in Hyderabad make it a wealth generating opportunity for the investors. Now is the perfect time to secure a high value asset in India’s fastest growing city.

What Homebuyers Need to Know About Property Tax Reforms in Budget 2025 ?

1. Reduction in Property Tax Burden
   The Budget 2025 introduces reforms aimed at reducing the financial strain on homebuyers by revising property tax rules. This includes potential reductions in stamp duty, registration fees, and other taxes that homebuyers must pay during the property purchase process.
2. Tax-Free Second Homes
   Individuals who own two residential properties can now declare both as self-occupied, eliminating the previous rule where the second property was considered deemed to be rented out and taxed on notional rental income (an assumed rental value even if the property was vacant). This change removes the tax burden on such properties, benefiting homeowners with multiple residences.

Higher TDS Threshold on Rent: A Win for Landlords and Tenants

This means that under Budget 2025, the threshold for Tax Deducted at Source (TDS) on rent has been increased from ₹2.4 lakh to ₹6 lakh per annum. Previously, if the annual rent exceeded ₹2.4 lakh, the tenant had to deduct TDS before paying the landlord. Now, TDS will only apply if the rent exceeds ₹6 lakh per year (₹50,000 per month), reducing compliance burdens for tenants and benefiting landlords with lower rental incomes.

Reviving Real Estate: The Role of SWAMIH Fund in 2025

Under the SWAMIH Fund-1 (Special Window for Affordable and Mid-Income Housing), a total of ₹15,530 crore has been raised to provide priority debt financing for the completion of stressed and stalled residential projects. These projects must be brownfield (already under construction), registered under RERA, and fall under the affordable or mid-income housing segment. The fund aims to revive delayed housing projects, ensuring that homebuyers receive their properties while boosting real estate sector growth.
SWAMIH Fund 2 is a much welcome step as SWAMIH Fund 1 was a big success. The launch of SWAMIH 2 with a ₹15,000 crore fund is crucial to reviving stalled residential projects and ensuring timely home deliveries. With an estimated 1 lakh housing units set to benefit, this initiative will boost buyer confidence, enhance liquidity in the real estate sector, and support overall housing market stability, driving sustained growth in the industry.

Tax Rebate Enhancements

One of the most significant takeaways from the budget is the increase in the tax rebate under the new tax regime. Individuals earning up to Rs 12 lakh per annum (Rs 12.75 lakh for salaried employees) will pay no personal income tax.

Tax Benefits on Home Loan Interest

Homebuyers will benefit from increased tax deductions on home loan interest payments, which can reduce their overall taxable income. Under section 24(b), deductions for home loan interest up to Rs 2,00,000.This is particularly advantageous for first-time homebuyers looking to ease their financial commitments.
With the revised income tax slabs and reduced tax rates, a rough estimate suggests that taxpayers could save up to Rs 10,000 per month, depending on their income bracket.

For example, in the case of a home loan, assuming an interest rate of 9% and a tenure of 20 years, a person’s loan eligibility could increase by Rs 10-11 lakh. This is because the additional Rs 10,000 in disposable income can be utilized for servicing EMIs, making homeownership more accessible. The ripple effect of increased disposable income will be felt across the retail loan industry, as more individuals will have the financial confidence to take on new loans, whether for housing, automobiles, or personal financing needs.

Support for Developers

1. Tax Benefits & Incentives
   The reforms aimed at easing regulations and providing incentives for developers will help accelerate the completion of residential and commercial projects, especially in growing real estate hubs.
2. Fast-Track Approvals & Single-Window Clearance
   Simplified approval processes and single-window clearance systems reduce delays in obtaining construction permits. Faster land acquisition policies make it easier for developers to expand projects.

Conclusion

The Union Budget 2025 brings transformative changes to the real estate sector, with a strong focus on affordable housing, infrastructure development, and investor-friendly policies. With rising demand, improved regulatory frameworks, and a favourable investment climate, Budget 2025 positions Indian real estate especially in cities like Hyderabad, Bengaluru, and Pune as a lucrative opportunity for homebuyers, NRIs, and investors. Now is the ideal time to invest, as policies and infrastructure expansion are set to enhance long term property value and market stability.

FAQs