Budget 2026 has generated considerable anticipation among prospective homebuyers, with many hoping for measures to ease the financial burden of homeownership. Several key changes and proposals within the budget are expected to significantly impact the real estate sector and the affordability of homes.
One of the most discussed expectations was an increase in the home loan interest deduction under Section 24 of the Income Tax Act. Many have felt that the existing limit of ₹2 lakh has become outdated given the rise in property prices and interest rates. Some experts have suggested raising this limit to ₹4-6 lakh to provide more realistic relief to borrowers by lowering the effective cost of borrowing and improving monthly cash flows.
Another significant expectation was to allow home loan interest deductions under the New Tax Regime. The move is intended to make owning a home more tax-efficient without complicating compliance. There had also been discussions about a 100% tax exemption on rental income up to ₹3 lakh for properties valued up to ₹50 lakh, which could incentivize investment in smaller rental units and address the shortage of affordable rental housing in metropolitan areas.
Furthermore, there was anticipation that the government might reintroduce incentives similar to Section 80EEA, offering additional interest deductions for first-time homebuyers, particularly younger professionals. The budget also addressed the definition of affordable housing, with expectations that the property price threshold would be raised from ₹45 lakh to ₹75 lakh for Tier-2 cities and up to ₹1 crore for metro cities.
Budget 2026 emphasizes infrastructure development with a proposed ₹12.2 lakh crore outlay for FY 2026-27, a 9% increase from the previous year. This investment aims to improve connectivity and stimulate economic activity, which can lead to the development of more affordable housing projects, especially in urbanized regions. The development of "City Economic Regions" (CER) in Tier 2 and 3 cities, with a proposed allocation of ₹5,000 crore per CER over five years, is expected to drive growth in these areas.
Moreover, the implementation of the Income Tax Act 2025, effective from April 1, 2026, aims to simplify tax compliance. By redesigning forms and simplifying rules, the government intends to make it easier for both salaried and self-employed individuals to manage their finances. This could lead to increased disposable income and improved creditworthiness for first-time homebuyers.
However, some experts noted that Budget 2026 did not include changes to income-tax slabs, home-loan deductions, or capital-gains structures. While this may provide predictability for homebuyers planning long-term EMIs, some argue that a recalibration of GST on construction inputs and moderated stamp duty structures in high-cost urban markets could further improve market sentiment.
In addition, a homebuyers' group has suggested that developers should face penalties for project delays, similar to how buyers lose interest subsidy benefits for payment defaults. The group proposed adding all EMIs received by defaulting promoters to their profit as a penalty, emphasizing that a promoter's promise to an allottee should be non-negotiable.