On February 1st, 2025, at 11:00 AM, the Union Budget 2025 was presented to the Parliament by Finance Minister Nirmala Sitharaman. The Finance Minister (FM)said that as a part of reducing burden on tax compliance, allowed the taxpayers to claim annual value of two self-occupied properties as nil without any condition.
Earlier under specific circumstances, an individual may claim income tax exemption on two self-occupied houses under Section 23(2) of the Income Tax Act, 1961. This was introduced in Budget 2019 to provide relief to taxpayers, particularly those owning multiple properties for self-use.
Currently, a taxpayer who owns more than one house property can declare two properties as self-occupied and not pay tax on notional rent. Which was now be proposed to be removed.
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According to the clause, the taxpayer must be the only owner of both properties. Proportionate exemption claims may be necessary in circumstances of joint ownership. The properties must be occupied by the taxpayer and/or their family (spouse, kids, or parents). The property can still be eligible even if it is vacant because of a relocation for work.
Interest on the loan for both self-occupied homes may be claimed under Section 24(b) if the taxpayer has taken out a home loan.For both properties combined, the maximum deduction is ₹2 lakh each fiscal year.
The third property (and beyond) will be considered rented out, and notional rent will be subject to taxation if the taxpayer owns more than two properties. Prior to Budget 2019, only one self-occupied residence was eligible for a notional rent exemption. Beginning in FY 2019–20, two self-occupied residences may be declared without being required to pay tax on the notional rent.
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The revised approach will lessen the burden on taxpayers by exempting all of these circumstances. The people who gain the most from this are those who have two residences for family purposes, such as one in a metropolis and one in their hometown. In addition to encouraging real estate investment, this tax break has lessened the financial strain on homeowners.
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