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Is 2025 the Best Year to Buy Property? Budget Announcements That Favor Homebuyers

by Ashiana / / 6433 views/ Reading Time: 4 minutes

The real estate market is gearing up for a transformative year in 2025. Budget 2025 government policies, tax incentives, and favorable interest rate trends create a perfect storm of opportunities for homebuyers to invest. Whether you’re a first-time buyer or looking to upgrade, the upcoming budget 2025 announcements and policy revisions are designed to make homeownership more accessible and affordable. In this blog, we’ll explore why 2025 could be the best year to buy property, breaking down the key factors that make it a customer-centric opportunity.

Is 2025 the Best Year to Buy Property? Budget Announcements That Favor Homebuyers

1. Second House Rental and Higher TDS Threshold: Tax Relief for Homeowners and Tenants


Budget 2025 has introduced pivotal reforms for homeowners with multiple properties and for the rental housing market. Previously, homeowners were required to pay tax on notional rent from their second property, even if it was not rented out. The new budget has relaxed this rule, providing much-needed relief to property owners. This makes second-home investments more appealing, particularly for those seeking to earn rental income.

Additionally, Budget 2025 has increased the TDS (Tax Deducted at Source) threshold on rent from ₹2.4 lakh to ₹6 lakh per annum. This change reduces compliance burdens for tenants and ensures smoother cash flow for landlords. Together, these measures simplify property investments, benefiting both homeowners and the rental market.

Ref: https://www.financialexpress.com/money/what-homebuyers-gained-from-budget-2025-more-savings-tax-perks-amp-more-3736381/

2. Government Housing Policies: A Push for Affordable Homeownership


The Indian government has been actively working to boost the real estate sector, particularly affordable housing. Policies like the Pradhan Mantri Awas Yojana (PMAY) aim to provide housing for all by 2025, offering subsidies and financial assistance to eligible buyers.

The Ministry of Housing and Urban Affairs defines affordable housing based on three criteria:

  • Property Size: Up to 60 sq. m. carpet area in major cities and 90 sq. m. in non-metropolitan areas.
  • Price Cap: ₹45 lakh for both metropolitan and non-metropolitan cities.
  • Buyer Income: Targeting middle- and lower-income groups.

While these definitions have helped many buyers, experts argue that the price cap of ₹45 lakh is outdated and doesn’t reflect the realities of high-cost cities like Mumbai. Revisions to these criteria in Budget 2025 could make homeownership accessible to a more significant population segment.

3. Interest Rate Trends: Lower EMIs, Higher Affordability


Interest rates on home loans play a crucial role in determining affordability. In recent years, interest rates have remained relatively stable, and experts predict they will continue to be favorable in 2025. Lower interest rates translate to lower EMIs, reducing the financial burden on homebuyers.

Additionally, real estate experts are advocating for an increase in the deduction limit for interest payments on home loans. Under Section 24 of the Income Tax Act, buyers can claim a deduction of up to ₹2 lakh annually on home loan interest. Experts suggest raising this limit to ₹5 lakh in Budget 2025, which would provide significant tax savings and encourage more people to invest in property.

4. Tax Reliefs: Maximizing Savings for Homebuyers


Tax incentives are among the most attractive benefits for homebuyers. Under current regulations, buyers can claim deductions on the principal amount (up to ₹1.5 lakh under Section 80C) and the interest paid on home loans (up to ₹2 lakh under Section 24).

If the government heeds experts’ recommendations and increases the interest deduction limit to ₹5 lakh in Budget 2025, it would be a game-changer for homebuyers. This change would not only reduce the overall cost of homeownership but also make it easier for buyers to manage their finances.

5. Affordable Housing Revisions: Aligning with Market Realities


One of the most significant challenges in the current affordable housing framework is the unrealistic price cap of ₹45 lakh, especially in high-cost cities like Mumbai. Anuj Puri, Chairman of Anarock, emphasizes that this cap needs urgent revision to reflect market realities.

For instance, in Mumbai, the price cap should be raised to at least ₹85 lakh, while in other metro cities, it should be increased to ₹60-65 lakh. Such revisions in Budget 2025 would allow more properties to qualify as affordable housing, enabling buyers to access benefits like lower GST rates and government subsidies.

Ref: https://www.hindustantimes.com/real-estate/real-estate-sectors-expectations-from-budget-2025-101738381203376.html

6. Lower GST Rates: A Major Financial Relief


Affordable housing projects currently benefit from a reduced GST rate of 1% (without Input Tax Credit). However, due to the restrictive price cap, many properties in metro cities do not qualify for this benefit.

By revising the affordable housing criteria in Budget 2025, more homes would fall under this category, allowing buyers to save significantly on taxes. For example, a buyer purchasing a property worth ₹85 lakh in Mumbai could save lakhs in GST if the property qualifies as affordable housing.

7. Subsidies and Incentives: Making Homeownership a Reality


Government subsidies, such as those under PMAY, are designed to make homeownership accessible to low- and middle-income groups. Combined with revised affordable housing criteria inBudget 2025, these subsidies would enable more buyers to qualify for financial assistance.

For instance, PMAY offers interest subsidies of up to 6.5% on home loans, significantly reducing the cost of borrowing. When combined with other benefits like lower GST rates and tax reliefs, these subsidies make homeownership a realistic goal for many.

8. Market Realities: Reflecting True Property Values


The current definition of affordable housing does not align with the actual property values in high-cost cities. For example, a ₹45 lakh budget is insufficient to purchase a decent home in cities like Mumbai, Bangalore, or Delhi.

By raising the price cap in Budget 2025 to reflect market realities, more properties would qualify as affordable housing. This would ensure that buyers can access benefits without compromising on location or quality. This change would also stimulate real estate market demand, benefiting buyers and developers.

9. The Role of the 2025 Budget: What to Expect


The upcoming budget 2025 announcements are expected to significantly change the real estate sector. Key expectations include:

  • Increased Deduction Limits: Raising the home loan interest deduction limit from ₹2 lakh to ₹5 lakh.
  • Revised Affordable Housing Criteria: Adjusting the price cap to reflect market realities in high-cost cities.
  • Enhanced Subsidies: Expanding the scope of PMAY and other housing schemes to include more buyers.
  • Lower GST Rates: Extending the 1% GST rate to more properties by revising affordable housing definitions.

These changes would create a more customer-centric real estate market, making 2025 an ideal year to invest in property.

Conclusion: Why 2025 is the Year to Buy Property


2025 will be a landmark year for homebuyers, thanks to favorable government policies, tax incentives, and revised affordable housing criteria. Whether you’re a first-time buyer or looking to upgrade, the combination of lower GST rates, increased tax benefits, and government subsidies makes this an opportune time to invest in real estate.
Tags: real estate, ashiana housing,
Category: Real Estate, Investment,

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What makes 2025 the best year to buy property?

2025 is expected to be an ideal year for homebuyers due to favorable government policies, tax incentives, and revised affordable housing criteria. Budget 2025 is likely to introduce measures such as increased home loan interest deductions, lower GST rates, and expanded subsidies under schemes like PMAY, making homeownership more accessible and affordable.

Budget 2025 is expected to bring several benefits for homebuyers, including:

  • Increased tax deductions on home loan interest (up to ₹5 lakh).
  • Revised affordable housing price caps to reflect market realities.
  • Lower GST rates (1% without ITC) for more properties.
  • Enhanced subsidies and incentives under schemes like PMAY.

These measures will reduce the financial burden on buyers and make homeownership more achievable.

Experts like Anuj Puri of Anarock suggest that the current affordable housing price cap of ₹45 lakh is outdated, especially in high-cost cities like Mumbai. Budget 2025 is expected to revise this cap to ₹85 lakh in Mumbai and ₹60-65 lakh in other metro cities. This change will allow more properties to qualify as affordable housing, enabling buyers to access lower GST rates and government subsidies.

About The Author

Ashiana, Ashiana Housing build homes. Homes surrounded by vast green spaces and fresh breeze. Homes cocooned in secured gated complexes. Homes where futures are forged and there are opportunities to grow. And Homes in environments brimming with healthy activity, trust and respect. At heart, we build communities with care.

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