The 2025 Budget offers major relief for homeowners with multiple properties. Previously, only one could be self-occupied, while a second was taxed on assumed rental income, even if vacant or used by family. Now, individuals can claim two properties as self-occupied, eliminating notional rent taxation. This reduces tax burdens and encourages real estate investment, especially in Tier-2 and Tier-3 cities. Example: Pooja Mehta, an IT professional in Hyderabad, owns properties in Pune and Chennai. She rents in Hyderabad, while her parents live in Chennai, and her Pune home remains vacant. Earlier, her vacant Pune property was taxed on an assumed rental income of ₹4.8 lakh per year. Under Budget 2025, she can now declare both properties as self-occupied, eliminating this tax burden and simplifying compliance. Clarity on the Two-Property Rule The concept of two self-occupied properties was first introduced in Budget 2019, but tax authorities often scrutinised taxpayers over why they did not reside in a particular home. The latest change removes ambiguity and provides much-needed clarity for property owners. Proposed Changes and Benefits for Taxpayers Dipesh Jain, Partner at Economic Laws Practice, explains that the Income-tax Act currently allows the annual value of up to two self-occupied properties to be nil if the owner cannot occupy them due to employment, business, or professional reasons. The proposed amendment removes the need for actual occupancy, making the annual value Nil regardless of the owner’s reason for not occupying the property. This change will benefit taxpayers with up to two properties and, once enacted, will apply from FY 2024-25. Gaurav Makhijani, Chartered Accountant at Roedl and Partner India, explains, “Under the current income tax law, if a person owns more than one self-occupied property, one is exempt from tax, but any additional property is considered let-out, and rental income is calculated based on market rent. The only exception to this rule applied when the second property was unoccupied for business or employment reasons, though proving this could be challenging. “The new budget proposal aims to clarify this by allowing tax exemptions for two self-occupied properties, which benefits individuals owning two such properties.” Kunal Savani, Partner at Cyril Amarchand Mangaldas, adds, “The annual value of a self-occupied property will now be treated as nil if the owner resides in it or is unable to occupy it for any reason. The previous limitation, which only allowed this benefit if the owner couldn’t live in the property due to business, employment, or profession, has been removed. This is a significant move welcomed by taxpayers, and it could encourage more investments in the real estate sector.”Original Article