Skip to content 
Owning a home is a necessity other than a common dream, representing, safety, security, and a sense of belonging. But obstacles like increasing property prices, lack of affordable housing, economic uncertainty, and high interest rates are making homeownership more and more challenging over the period now. Restricted access to credit, particularly for first-time buyers is another barrier. Red tape and government policies slow down the process, while cultural expectations cause some to purchase homes they cannot afford. Also, urbanization has changed the definition of ‘home’ with most people prefer renting or co-living due to its convenience. All these challenges are nudging individuals towards trying alternative living arrangements, diverging from conventional homeownership aspirations.
Formidably, Indian real estate has been going through a dramatic transformation in the development of the sector due to urbanization, rise in income levels, and government efforts to enhance affordable housing. With India’s economy expanding and the number of people moving to cities, the real estate industry continues to be among the major drivers of the country’s development, promising high returns on investment and long-term value creation opportunities.
How Budget 2025-2026 Contribute to Real Estate
For Indian homebuyers and real estate investors, the concept of handling property-related expenses in the backdrop of taxation complexities may prove to be daunting. With the 2025-26 budget, for individuals having an income of below ?12 lakh annually, a number of tax deductions and allowances bring down the aspect of homeownership as well as real estate investment to more reasonable levels. How can these tax advantages lead to the growth of real estate? what are the significant tax benefits for individuals in this income bracket and how they can be utilized to achieve maximum financial outcomes in real estate?
The new budgetary allocations of the Indian government have unveiled a number of initiatives to reboot the realty sector, primarily focusing on low-cost housing and infrastructure development schemes. These steps collectively aim at stimulating growth and investment in the real estate sector, fostering an improved transparent and investor-friendly platform, and facilitating overall economic growth.
The Indian government’s recent budgetary measures have introduced several initiatives aimed at revitalizing the real estate sector, with a focus on affordable housing and infrastructure development. Key highlights include:
1. SWAMIH Fund 2 Allocation: ?15,000 crore has been allocated for the SWAMIH Fund 2 to speed up the completion of about 1 lakh stuck housing units. This is intended to restore liquidity in the real estate sector and grant homebuyers access to ready-to-move-in flats.
2. Tax Reforms and Incentives: The budget suggests the revival of the 100% tax holiday for developers under Section 80-IBA of the Finance Act, 2016. This is likely to increase the supply of affordable housing by providing substantial financial incentives to developers working on this segment.
3. Redefinition of Affordable Housing Definition: The affordable housing criteria are recommended to be redefined, particularly in costlier urban cities like Mumbai. Increasing the price cap to a minimum of ?85 lakh in Mumbai and ?60-65 lakh for other metro cities would make more houses qualify as affordable, thereby making the buyers eligible for lower rates of GST and additional subsidies.
4. Infrastructure Development: The launch of Phase IV of the PM Gram Sadak Yojana aims to improve rural connectivity to 25,000 rural habitations. Improved infrastructure should stimulate rural economic growth and increase the attractiveness of the areas for investment, including real estate.
5. Relief for Capital Gains Tax: The budget introduces a reduction in the rate of long-term capital gains tax from 20% to 12.5%, and the option to apply the new rate without adjustment for inflation or the current rate with inflation indexing. This is designed to provide relief to taxpayers, especially those selling older assets, and is expected to release liquidity into the property market.
These steps together hope to spur development and investment within the realty sector, supporting a more open and investor-favourable platform, and toward overall economic development.
In CY 2024, real estate sales were slowed down because of state and general elections, with top seven cities’ residential sales declining 4% to around 446,000 units and new launches declining 7% to around 413,000 units, according to ANAROCK numbers. But if there are suitable incentives for affordable housing, then CY2025 can witness a robust rebound where the residential sector can regain the 2023 highs in launches and sales.
While the 2023-24 budget emphasized the rise in allocations for low-cost housing schemes such as PMAY, the 2025-26 budget brought tax reforms and incentives to boost demand and investment in the real estate market. In Budget 2025, the government introduced policies targeting multiple homeownership to regulate real estate investments and promote affordability. A key change is the modification of tax laws related to two self-owned properties. Taxpayers can now declare two self-owned properties with nil annual value, removing the previous requirement for one property to be considered unoccupied due to job-related relocation.
Commenting on the impact of the 2025 Budget on real estate, Anuj Puri, Chairman of ANAROCK Group, stated, “The Union Budget focused on economic expansion, infrastructure development, MSMEs, futuristic cities, and middle-class welfare and brings substantial relief for the middle class. It also aims to stimulate rural consumption – an essential step toward unlocking India’s economic potential. From a real estate perspective, the budget delivers both direct and indirect benefits, acting as a catalyst for growth. However, a notable shortfall was the absence of major announcements for the affordable housing sector, leaving stakeholders disappointed”.
He added, “Despite this, the budget overall remains strong and growth-oriented, with a clear focus on economic development and enhanced consumption”.
Conclusion
In conclusion budget 2025 has revolutionary changes to offer to the real estate segment, with utmost emphasis on low-cost housing, infrastructure growth, and investor-favourable initiatives.
Source : Slice On India
