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Here is a ready reckoner on Real Estate Investment Trusts (REIT's) and Infrastructure Investment Trusts (InvITs) in the form of an FAQ. This covers key information for the layman and is meant to serve as a basic introduction.

FAQ on Real Estate Investment Trusts (REIT's)

1: What are REITs? It is a mutual fund that invests in real estate.

2: Where can they invest? Commercial real estate only through a special investment vehicle (a 3rd party firm) or directly.

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Budget 2017 has proposed a slew of benefits related to long-term capital gains. The most important is the shift of the base year to be used for long-term capital gains computation for all asset classes. Here is a summary and illustration of long-term capital gains computation with base year 2001.

1: Change in duration for computation of capital gains

Gains from the sale of immovable property (land or building) after a holding period of 2 years will now qualify for long-term capital gains. Earlier this was three years.

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The rent received from a house property is treated as income and taxed as per slab. However, certain deductions are eligible for this taxable amount. Budget 2017  had restricted the amount of deduction one can claim. Here is an illustration and a revised real estate returns calculator.

The taxable income is given by:  rent - (loss from house property)

Loss from house property (old rule)

loss from house property = Rental income - (corporation+water/sewage tax) - (standard deduction) - (interest component of home loan)

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‘Should I buy a house/apartment now’ or ‘should I continue to stay in a rented accommodation?’  I am sure you would agree that this is a common dilemma faced by many youngsters.

In fact, although there are several decent ‘rent’ vs. ‘buy’ calculators available, I continue to receive requests to make one.  For a variety of reasons, I am not motivated to make one although from a mathematical point of view it is reasonably interesting.

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Here are five reasons why I will never invest in real estate.  This is me taking sides on the equity vs. real estate debate. There is more to investing than returns. So instead of comparing past returns of both asset classes and claiming equity won or real estate won, I would like to consider other important aspects.

So here goes. I will never invest in real estate because,

1. It will skew my asset allocation perhaps forever

Personal finance has two components: insurance (or fortification) and investment.

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