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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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There is  a strong buzz that real estate prices are going to crash. I can count three types of people who are contributing to this buzz:

1) Presstitute-portals - they don't know need a rhyme or reason. All they want is traffic.

2) Those who sell equity products - what better chance to remind their clients that equity is a much better asset class.

3) Equity investors - driven by a delectable sense of 'I told you so', they would like to share articles that portend a real estate crash among their friends and relatives.

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