by prasidhirealtysolutions.in 
Table of Contents
Union Budget 2025-26: Will It Reduce Property Taxes & Home Loan Interest?
A Game Changer for Homebuyers and Investors?
Introduction: What Homebuyers & Investors Can Expect from Budget 2025-26?
The Union Budget 2025-26 has sparked widespread discussions in the real estate sector, particularly among homebuyers, investors, and developers. With India’s housing market undergoing rapid changes, stakeholders have eagerly anticipated reforms in property taxation and home loan interest rates.
The burning question is: Will Budget 2025-26 bring tax relief on property purchases and make homeownership more affordable?
As one of India’s leading real estate consultants, Prasidhi Realty Solutions breaks down the budget’s impact on property buyers, home loan borrowers, and the overall real estate sector.
Key Expectations from Budget 2025-26 for the Real Estate Sector
1. Higher Tax Deductions on Home Loan Interest
One of the biggest reliefs homebuyers expect is an increase in tax deductions on home loan interest under Section 24(b). Currently, the tax exemption limit for interest paid on home loans is ₹2 lakh per annum for self-occupied properties.
However, experts predict that the government might increase the deduction limit to ₹5 lakh to encourage homeownership. This move could significantly reduce tax liability and make home loans more affordable.
2. Reduction in Property Taxes
A major concern for homeowners is the high property tax levied by municipal corporations. Industry experts are urging the government to:
- Reduce property tax slabs for residential properties.
- Offer tax incentives for first-time homebuyers to promote affordability.
- Standardize property tax rates across states to eliminate discrepancies.
A lower property tax structure could make owning a home in metropolitan cities like Mumbai, Delhi, Bangalore, and Hyderabad more cost-effective.
3. Interest Rate Subsidies for Affordable Housing
Under Pradhan Mantri Awas Yojana (PMAY), the government provides interest subsidies on housing loans for the Economically Weaker Sections (EWS) and Low-Income Groups (LIG).
Budget 2025-26 is expected to:
- Extend PMAY benefits until 2028.
- Increase the interest subsidy cap for middle-income groups.
- Encourage private builders to invest in affordable housing projects with tax benefits.
4. GST Reduction on Construction Materials
High Goods and Services Tax (GST) on materials like cement, steel, and paints increases construction costs. Developers are lobbying for:
- Reduction in GST on cement from 28% to 18%.
- Lower GST on steel and tiles to reduce project costs.
- More tax relief for green building materials to promote sustainable construction.
A lower GST on construction materials could help bring down property prices for homebuyers.
How Budget 2025-26 Will Impact Homebuyers?
For potential homeowners, the budget’s provisions can mean significant financial savings. Let’s break it down.
1. Lower Home Loan Interest = Reduced EMI
If the home loan interest deduction increases from ₹2 lakh to ₹5 lakh, homebuyers will enjoy higher tax savings.
Example:
A homebuyer with an ₹80 lakh home loan at 8% interest pays ₹6.4 lakh annually in interest.
Currently, only ₹2 lakh is tax-deductible.
If the limit is raised to ₹5 lakh, they can save ₹90,000–₹1.5 lakh in taxes annually.
2. Cheaper Construction Costs = Affordable Housing
With reduced GST on materials, developers can cut costs and pass the savings to buyers. This could lead to:
- Lower property prices for new homebuyers.
- Increased demand for mid-range and luxury housing.
- Faster completion of stalled projects due to reduced overhead costs.
3. First-Time Homebuyers to Get More Benefits
The government may introduce additional rebates for first-time homebuyers, such as:
- Lower stamp duty charges.
- Extra tax incentives under Section 80EE for interest paid on home loans.
- Longer repayment tenure with lower EMIs for young buyers.
4. Rise in Housing Demand
If housing loans become cheaper, and tax exemptions increase, we can expect:
- A surge in demand for affordable and mid-segment homes.
- Increased real estate investment in Tier 2 and Tier 3 cities.
- Higher rental yields due to increased buying activity.
How Budget 2025-26 Will Impact Real Estate Investors?
For real estate investors, the budget could enhance profitability and drive long-term gains.
1. Capital Gains Tax Exemption on Property Sales
Investors selling properties often pay high capital gains tax.
Experts expect Budget 2025-26 to:
- Extend tax exemptions under Section 54 for reinvestment in real estate.
- Introduce lower tax rates for long-term real estate investors.
- Provide capital gains tax relief for rental property owners.
This could encourage more real estate transactions and boost liquidity in the market.
2. Real Estate as an Industry = Easier Financing
The long-standing demand for real estate sector recognition as an industry could finally be met.
If approved, this could lead to:
- Easier access to bank loans for builders.
- Lower interest rates on real estate project financing.
- More institutional investment in the sector.
3. Increased Rental Income Opportunities
If home loan interest rates drop, more people will buy second homes, leading to:
- Higher rental income for investors.
- Better ROI (Return on Investment) on rental properties.
- Increased demand for co-living and serviced apartments in metro cities.
Challenges & Risks: What Could Go Wrong?
Despite positive expectations, there are challenges that the real estate sector must navigate.
1. Delay in Policy Implementation
Even if tax reliefs are announced, bureaucratic delays may slow down implementation, affecting home buyers’ benefits.
2. Interest Rate Volatility
The Reserve Bank of India (RBI) plays a crucial role in setting interest rates.
If inflation remains high, RBI may not cut repo rates, affecting housing loan rates.
3. State-Level Property Tax Variations
Since property taxes are determined by state governments, uniform tax cuts might not be possible nationwide.
Final Verdict: Is 2025 the Best Time to Buy Property?
Considering the potential benefits of Budget 2025-26, this could be the perfect time to invest in real estate.
With expected tax deductions, lower GST, and affordable home loans, both homebuyers and investors stand to gain significantly.
If you’re planning to buy a home or invest in property, connect with Prasidhi Realty Solutions for expert guidance on the best property deals, home loan assistance, and real estate investment strategies.
Conclusion: Make Smart Real Estate Decisions in 2025
Budget 2025-26 could redefine the real estate market, making homeownership more accessible and investment opportunities more lucrative. Stay ahead with expert insights from Prasidhi Realty Solutions—your trusted partner in real estate.
🔥 Ready to invest? Contact us today!
