How To Make The Most From Real Estate Investment Sales

Are you sitting on a notionally high return from your investments in commercial or residential projects in India? And, writing down the numbers on papers is not giving you enough satisfaction? It is time to exit your investment.

While sitting duck properties are good, exiting at the right time when the market is appreciating is the right move, especially if upcoming flats for sale in India was purchased for investment and not for residence.

Here are a few tips that will help you sell it at the right time and right price:

1. Check for warning signals: Even if your property has appreciated well to cover your loan and give you handsome returns, the shape of the market also plays an important role in the timing of the sale. Check the sentiment in the real estate market. Are investors shunning it in general? Are regulations for home owners looking like they are going to get tougher? Is there an over-supply of properties in the same area? Have too many builders announced upcoming apartments in India? All these are warning signals that it might be a long and arduous search for a buyer. Buyers look for bargains during such times.

The notional land rate and the value that you have in mind might not be the same as the selling price of your property. Selling a property is time-consuming and is expensive and takes a lot of effort. Do not go through the process if the timing is not right and you do not have a crying need for cash.

2. Calculate tax on long-term and short term capital gains: The moment you make any returns, the taxman will come chasing after you. So, before you calculate the returns on your investment, check the tax bar and deduct it from your profit. The timing is also important as tax on both long-term and short-term capital gains is fixed at 20%. However, while calculating tax for long-term capital gains, the tax authorities recalculate the asset cost based on indexation which factors in inflation. That will greatly reduce the tax paid and, hence, can increase profit. Long-term capital gains tax is applicable for a minimum of three years after the purchase of the property.

3. Reinvesting profits can save tax: If you reinvest the gains from a property sale back into another real estate loan, you will be exempt from capital gains tax. So, unless you have an urgent need for cash, do consider reinvestment. Since you can retain your original investment, put the gains back into another smaller yet promising investment.

4. Roll-over loans: The property loan that you have taken has fulfilled its purpose. If your monthly earnings can support an EMI, do not repay the entire loan at one go. Do roll it over to other projects after discussions with the bankers. Servicing an EMI would save tax on your income. If you can rollover a loan that you have completed all the documentation for, you need not go through the process again for another project that might come your way.  

(The writer has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)