Relief for house owners, can claim nil tax on two self-occupied properties now, without conditions

Finance minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman in her Budget for 2025 offered relief to homeowners with two house properties.

"It is proposed to provide that the annual value of the property consisting of a house or any part thereof shall be taken as nil if the owner occupies it for his own residence or cannot actually occupy it due to any reason," the Budget document said.

At present, the annual value of two such properties can be considered as 'Nil' provided the homeowner resides there or in the cases where she cannot occupy it because she is employed elsewhere, for instance. Budget 2025 has now sought to do away with the conditions required to treat the annual value as 'Nil'.

"Considering the difficulties faced by taxpayers, it is proposed to do away with the above conditions for which the property cannot be occupied by the individual and extend the benefit in respect of property which cannot be occupied for any reason," says Homi Mistry, Partner, Deloitte India.

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"By acknowledging the diverse housing needs of families, this decision not only provides greater tax relief but also encourages real estate investment. The move aligns with the government’s broader focus on financial empowerment and ease of living, strengthening the middle class while simplifying the tax structure," says Adhil Shetty, CEO of Bankbazaar.com.

"Earlier, the law contemplated that the notional value of a residential house which is not in occupation would be treated as nil only if the person was living at some other place in a building not belonging to him due to employment/occupation etc. Now such restricting condition has been removed and any person owing two houses can claim notional rental value for his second home as nil irrespective of any condition," said Sandeep Chilana, Managing Partner, CCLaw.

Also read | Old tax regime vs New tax regime: Which one should you choose for FY26?

How capital gains on property sale are taxed

For dividing assets into long-term and short-term, there are only two holding periods — 12 months and 24 months - post Budget 2024 announced on July 23, 2024.

Therefore, all listed securities with a holding period of more than 12 months are considered as long-term. The holding period for all other assets is 24 months. Therefore, an immovable property that is held for more than 24 months will be considered as long-term.

The STCG on the sale of the property will continue to attract tax at income slab rates, while the taxation on LTCG on other financial and non-financial assets is reduced from 20 percent to 12.5 percent .