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Friday, August 3, 2012

Real Estate Investment: Good or bad? | Strategic Growth- Managing ...

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Today multiple investment options are available in market with different specification and one of them is real estate. While asking to anyone about investing in real estate most of people including financial expert give instant response that real estate is good investment option.

Everyone think that one can earn lacs of rupees by buying and selling as real estate provides decent returns. Yes Real estate do provide good returns over a period of time but apart from return you have consider various other factors bedeciding real estate investment is good or bad . In this post we will guide you to make decision that real estate is good investment option or bad.

Our one of the client Mr.Raju thought real estate is good investment option and he has purchased flat at prime location of Navi Mumbai in 2010 for investment purpose. After 2 years that flat was giving him return of 50% and in order to fetch profit he has sold this flat.

Unfortunately, he was unaware about the tax implication on his hasty decision. Not only did he have to pay a substantial amount as tax on the profit, he also had to shell out the tax exemptions that he was availing of on the home loan. After considering this tax implication he was earning 5% return only.

Learning:-Any financial transaction without knowledge can turn in to disasters.

Let?s understand all factors described above, before making any real estate investments:-

Tax Implications:-

Short term capital gains tax:

As per income tax rules, if anyone sells real estate within 36 months (3 years) of buying it, the profit (difference between the purchase price and the selling price) will be added to his income for that particular year and taxed as per the tax bracket he is in.

So if you come in the highest bracket (tax at 30%), your gains will be taxed at 30%.Therefore if you gained 10 lakhs from the sale, you will have to pay 3 lakhs as tax.

Long term capital gains tax:

As per tax rules if you sell real estate after three years or 36 months, then it?s considered long-term capital gain (LTCG) and you have to pay 20% of the profit as tax.

You can get exemption of this tax under certain conditions. ?To get the exemption, you need to purchase the new residential house within a period of one year prior to or two years after transfer of the original house. As far as under-construction house goes, the construction needs to be completed within three years from the date of transfer of the original house.?

Loan implications:-

Due to lack of money if you have bought the house by taking home loan than you can take advantage of tax exemption on your principal amount (up to 1 lakh per year) and interest (up to 1.5 lakh per year).

Income Tax Act says, if you sell a house within five years of buying it, the tax benefits on the principal repayment and interest paid on the home loan are reversed. These are then included in your taxable income in the year of sale.

Therefore, if you have availed 5 lakh tax exemptions for the principal (in 80 C) & 7.5 lakh tax exemption on interest in last 5 years (since purchase of this house), you have to add this entire amount in your taxable income & you will be taxed at whatever income bracket you fall in. If you?re in the highest bracket of 30%, then 30% of 12.5 lakhs will have to be paid to income tax dept.

Home loan Interest implication:-

If you have purchased a house through home loan, than you have to pay EMI. EMI consists of the principal amount and interest. In the initial interest component in EMI is maximum. You have to simply reduce your profit by Interest amount you have paid to bank.

Maintenance & other Cost:-

If you have purchase flat than you are liable to pay fix maintenance cost to society every month. Not only that every year you will be paying municipality/ property tax.

RBI has passed directive that prepayment penalty is not applicable otherwise it could lower your profits even more as bank were charging up to 2% penalty.

Rental Income:-

Many people think that they will rent their real estate investment and earn money. Nothing wrong in it but maximum rent in most of the case is around 6% on investment amount. This 6% return will not even cover inflation.

Apart from this you have to declare this rental income as taxable income which may increase your income tax burden.

Cost of Time and trouble:-

It is very easy to buy property but sometime it is very difficult to sale. You might have to wait month together to get good deal for your property, During that time,you are investing your time and money in efforts to sell this property.

Sometime in need of urgent money you may sale this property at discounted rate or may end up paying brokerage charges to broker. This will further reduce your profit.

If you put all factors considered above than PPF, FD or RD could be better investment option as you are earning fix around 9-10% interest per annum. This return is assured & returns tension free. Of course income tax is applicable on this return but if you consider all factor describe above it is defiantly good deal compare to real estate.

So, real estate is good investment option only if:-

(1)?? You can hold property for long time (more than 5 Years)

(2)?? If you have excessive cash and you need not to take any loan for making investment.

(3)?? You are making profit in black transaction and white transaction profit is very less.

(4)?? You are always reinvesting profit from real estate to real estate.

After reading this article if you are thinking of hiding your transaction for not paying tax than think again, every transaction done above certain value is in eye of income tax.

Every registry paper requires your PAN card details and these details are capture by income tax. Income tax department may send you notice & you may be in other trouble.

So next time if you get advice that real estate is good investment option do remember what you read here. It may save your time and money.

All the Best!

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Source: http://strategic-growth.in/finance/index.php/real-estate-investment-good-or-bad/

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Thursday, August 2, 2012

Obama Leads Romney In Pew Poll By 10 Points - Business Insider

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President Barack Obama has one of the biggest leads we've seen for him in quite a long time in a new Pew Research Poll: He's up 10 points over?Mitt Romney.?

Don't take much from it, though. Pew's sample of registered voters is highly skewed, oversampling Democrats by almost 20 points. Pew surveyed 1,956 registered voters. Of those,?42 percent were Democrats and just 23 percent were Republicans. We can't remember a poll being that imbalanced.?

Pew's poll in June also slightly oversampled Democrats and gave Obama a 7-point lead.?

So what we can take from this is that Independents are still split on the two candidates, but they've trended toward Romney in the past few weeks. Independents in the poll voted for Romney, 45 percent to 43 percent. That's a 3-point swing from Pew's last poll, when Obama was up 46-45.?

Here's a look:

Pew Research Center

Also, Romney still has an edge in "engagement," which bodes well for voter turnout in November. The percentage of Obama supporters saying they've "given a lot of thought" to the election has actually slipped 5 points in the past few weeks.?

Pew Research Center

Source: http://www.businessinsider.com/obama-romney-poll-pew-research-bias-july-2012-8

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Unreasonable Doubt

?Some high-ranked swimming officials, experts, have questioned [her performance], pointing to a history of positive drug tests by Chinese swimmers,? Dan Hicks said before NBC?s broadcast of Tuesday?s 200 IM. ?That is all pure speculation at this point.? Hicks and Rowdy Gaines continued to engage in that pure speculation after the race began. ?I don't think in this day and age it should be a big surprise, Dan, that people will be suspicious,? Gaines said as the field passed the 50-meter mark?we?re not suspicious, but you know how people are.

Source: http://feeds.slate.com/click.phdo?i=071e087c1865b4c5e31f3bc764099d35

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Armenia Should Retaliate Against Turkish Ban on Buying Real Estate

Publisher

California Courier

Turkey?s Cabinet is in the process of finalizing a law adopted by Parliament last May which bans citizens of six countries ? Armenia, Cuba, Nigeria, North Korea, Syria and Yemen ? from buying real estate in Turkey, according to Sabah newspaper. No reason was given for blacklisting these countries.
The law demonstrates the persistent hostility of Turkish officials, contradicting their sugarcoated announcements about wanting to normalize relations with Armenia. After reviewing the restriction placed on its citizens, the Armenian Parliament should consider adopting retaliatory measures against citizens of Turkey interested in purchasing Armenian properties.
The proposed Turkish law is doubly provocative since it places a ban on citizens of Armenia, while expanding from 53 to 129 the list of countries authorized to invest in Turkey, and allows citizens of another 52 countries to invest with some limitations. The new law even permits nationals whose governments ban Turkish investments to purchase property in Turkey. Relaxing restrictions on foreign investments in the Turkish real estate market would bring an additional $300 billion of revenue over the next 10 years, Sabah wrote.
Here are the restrictions that the new law places on certain countries: Citizens of China, Denmark, East Timor, Fiji and Israel may only purchase a single residence in Turkey. Jordanians, on the other hand, may purchase two houses and one place of business. Russians and Ukrainians may buy real estate anywhere in Turkey, except on the Black Sea coast, while Georgians cannot buy real estate in the coastal and border regions. Greek citizens are not permitted to purchase property near the Aegean Sea and the border areas, except for those who are of Turkish origin. Citizens of Afghanistan, Egypt, Latvia, Morocco and some other African countries are not allowed to buy agricultural land, vineyards or orchards. Albanians can purchase a residence or a business, but not land.
Citizens of another 16 countries, including Iran, Palestine and India, need permission from the Ministry of Interior before acquiring real estate in Turkey. Iraqis, on the other hand, need a permit issued by the Turkish Foreign Ministry. A foreign individual or firm cannot purchase more than 10% of the land in a particular district or a total of 30 hectares in all of Turkey. The law also bans foreigners from purchasing or leasing real estate in military and security zones.
Among the 129 countries allowed to purchase property in Turkey without conditions or restrictions are: Azerbaijan, Bangladesh, Belarus, Brunei, Kazakhstan, Kosovo, Kuwait, Kyrgyzstan, Lebanon, Libya, Morocco, Oman, Pakistan, Qatar, Saudi Arabia, Sudan, Tajikistan, Turkmenistan, United Arab Emirates, and Uzbekistan.
What steps Armenia should take in retaliation for this new Turkish law? Article 31 of the constitution of the Republic of Armenia states: ?foreign citizens and stateless persons shall not enjoy the right to land ownership except for cases prescribed by the law.? According to a report submitted by the Armenian government to the World Trade Organization (WTO): ?foreigners are allowed to use land through lease contracts with an Armenian counterpart. Furthermore, foreigners have the right to own real estate properties built on Armenian land, and to exploit renewable and non-renewable natural resources on the basis of concession contracts granted by the Government.? Armenia?s report to the WTO also stated that ?the legislation grants the Government the power to limit and prohibit foreign investment for national security concerns.?
It would be important to know the number of foreign individuals and companies that lease land or own buildings and businesses in Armenia, their names, citizenship, locations, sizes, and market value. How many of these leases are held by Turkish citizens? Raising these questions is relevant because in the past Armenian officials have stated that there is no need to restrict foreigners who are interested in investing in Armenian real estate.
While it is understandable that Armenia would encourage foreign investments, it is not known if certain sensitive border areas are exempt from leasing to foreigners such as Azeris and Turks for national security reasons. There are also lands that contain strategic reserves of certain precious metals and minerals. They too should not be leased to foreigners who are citizens of hostile nations.
In retaliation for the new Turkish law banning citizens of Armenia from purchasing real estate in Turkey, Armenia should immediately pass a law banning Turkish citizens from all purchases or leases of real estate. No exceptions should be made!
Armenians should not be too worried that they cannot buy land in Turkey. Hopefully, they will get their lands back someday without paying for it!

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Source: http://www.armenianlife.com/2012/08/02/armenia-should-retaliate-against-turkish-ban-on-buying-real-estate/

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Town, Street, House Type, etc. Agent's Name | Sutton Harrison Real ...

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Source: http://www.suttonbrandonrealestate.com/town-street-house-type-etc-agents-name

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Pence Proposes 10% Cut In Indiana's Income Tax Rate - blog*spot

Republican gubernatorial candidate Mike Pence announced his first major state finance proposal today. He wants to cut the individual income tax rate by 10%, providing the largest income?tax cut in Indiana history. Pence would reduce the individual income tax rate from 3.4% to 3.06%. The average family of four would save about $228 a year in taxes. A small business owner with a net income of $300,000 would save about $1,000 a year.

"The time has come to cut taxes for every Hoosier, in the city, in the factory and on the farm," said Pence. "We will make Indiana the most attractive place in the Midwest to start a business, grow a business, or get a job."???

"I believe strongly that when government has too much money, it needs to return that money to taxpayers who first earned it," said Pence. "Thanks to Governor Daniels, we are in such a positive fiscal condition that we can afford to do that on a permanent basis."

Pence says that the tax cut would reduce state revenues by about $533 million a year, but he says Indiana would benefit from having the lowest effective tax burden in the Midwest. Even with the tax cut, Pence says that he believes tax revenues will exceed expenditures by a little more than a billion dollars over the next two years. Indiana's current budget surplus is about $2 billion if you discount the fact that the state's public pension systems are grossly underfunded and the more than $2 billion the state borrowed from the federal government after the state's unemployment insurance trust fund went broke at the beginning of the recession that started in 2008. Current Indiana law already requires the state to refund to taxpayers half the surplus in excess of 12.5% of appropriations and half of that amount to paying down the state's unfunded pension liability.

Pence's Democratic opponent, John Gregg, welcomed Pence to the tax-cutting argument that he has already put forward. Gregg earlier proposed the elimination of the sales tax on gasoline, which he says would save the average family between $261 and $522 annually, and result in a loss of state revenues of about $540 million. Gregg told the Star's Mary Beth Schneider that his tax cut plan was "more significant" than Pence's tax cut plan.

I'm all in favor of keeping taxes as low as possible, but I wonder how wise Pence's and Gregg's tax cut proposals are at this time. The surplus can disappear just as quickly as it appeared if the recession takes a double dip as it appears it may, and the surplus?really just exists on paper?by excluding the state's outstanding obligations. Gov. Daniels will also have spent all of the money realized from the leasing of the state's toll road by the end of his term and the state will face difficult challenges in keeping up with its transportation needs.

Source: http://advanceindiana.blogspot.com/2012/07/pence-proposes-10-cut-in-indianas.html

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Colorado congressman: Movie theater shooting shows we need Obamacare

Colorado Democratic Rep. Ed Perlmutter said during a Monday online town hall meeting that victims of the July 20 movie theater shooting in Aurora, Colo. ??would be uninsurable? without President Barack Obama?s health care overhaul.

?[U]nder the Affordable Care Act they can?t be discriminated against starting in 2014.?

RevealingPolitics.com reproduced video of Perlmutter telling his constituents that Obamacare would ?stop the discrimination against people with prior illnesses or injuries ? or, say, some of the folks who were shot in the theater.?

Perlmutter also called for a renewal of the federal government?s 1996 assault weapons ban in the wake of the shooting. James Holmes, a 24-year-old former graduate student, has been charged with 24 counts of murder.

Colorado Gov. John Hickenlooper, another Democrat, has been more measured in his response to the Aurora tragedy.

?I think the discussions of ?do we need stricter laws? should probably wait until the families have grieved,? Hickenlooper said July 23, ?and at least until we bury the people who we lost.?

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