4 New Rules On Property: As soon as the new year 2025 arrives, many new rules related to property and rent are going to be implemented in India. These rules will not only affect landlords, but will also bring significant changes for tenants and property buyers. The aim of the government is to increase transparency in the real estate sector and stop tax evasion.
With these new rules, on one hand the rental income will be closely monitored, on the other hand the process of property registration will be made easier. Additionally, energy efficiency standards are also being tightened. Let us know about these 4 major changes in detail.
New rules for property and rent: at a glance
| Rule | Description |
| rental income taxation | Rental income will have to be declared only under ‘Income from House Property’ |
| property registration | NGDRS system will be implemented in Delhi |
| energy efficiency | Renting out G-rated properties will be banned |
| Long Term Capital Gain | New LTCG tax rule will be applicable on selling property |
New tax rule on rental income
A new tax rule on rental income is going to come into effect from January 1, 2025. Under this new rule, landlords will have to declare their rental income only under ‘Income from House Property’. This change has been made to prevent tax evasion.
What will change?
- Now rental income cannot be declared under ‘Profits and Gains from Business or Profession’.
- Homeowners will be able to avail of only limited deductions.
- Standard deduction will be limited to 30%.
- There will be exemption on municipal tax and home loan interest.
Who will benefit?
This rule is beneficial for the government because it will increase tax collection. However, this may be challenging for homeowners as they may have to pay higher taxes.
New property registration system in Delhi
National Generic Document Registration System (NGDRS) will be applicable for property registration in Delhi from January 1, 2025. This system will make the entire registration process digital and transparent.
Benefits of NGDRS
- Online registration facility
- The process will be completed in less time
- Chances of fraud will be less
- There will be less trips to the sub-registrar office.
What will need to be done?
Property buyers and sellers will have to use a new online portal. On this portal they will be able to upload their documents and complete the registration process.
New norms of energy efficiency
Like France, new energy efficiency norms will be implemented in India from January 1, 2025. Under this, it will become difficult to rent less energy efficient properties.
What will be the new rules?
- Renting of G-rated properties will be prohibited.
- This rule will also apply to F-rated properties by 2028.
- Landlords will have to get energy audit of their property done.
- Renovation may be required to increase energy efficiency.
What effect will this have?
This rule will be beneficial for the environment. However, owners of old buildings may have to spend on renovation. Tenants may also have to pay more rent for energy efficient homes.
New tax rule on long term capital gains
There will be a change in the rules of Long Term Capital Gain (LTCG) tax on sale of property from January 1, 2025. This rule is important for property sellers.
Highlights of the new LTCG rule
- Now LTCG tax will be levied at 12.5% flat rate.
- Indexation benefit will end.
- If the property price increases by less than 9% annually, there may be a loss.
Who will benefit?
This rule is beneficial for the government because it will increase tax collection. However, this may be challenging for those selling property as they may have to pay higher taxes.
What should landlords and tenants do?
In view of these new rules, landlords and tenants should take some precautions:
Tips for Landlords
- Accurately report rental income.
- Get an energy audit done and do renovations if necessary.
- Take expert advice for tax planning.
Tips for Tenants
- Give priority to energy efficient homes.
- Be sure to get information about energy rating in the rental contract.
conclusion
These new rules, which will come into effect from January 1, 2025, will bring major changes in the real estate sector. While on one hand this will increase transparency, on the other hand home owners and property sellers will have to face new challenges. All concerned should be aware of these rules and update their financial planning accordingly.
Disclaimer: This article has been written for information purposes only. Although the information given here is taken from reliable sources, it may not be completely accurate. Please seek expert advice before taking any financial or legal decisions.
