Announcement

Collapse
No announcement yet.

Builders & Real Estate Bulls Theory Proved Wrong

Collapse
X
Collapse

Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
12768 | Posts
  • Time
  • Show
Clear All
new posts

  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    There is always a catch

    Originally posted by realacres View Post
    +1 & hell with RE.

    SBI has started a new Tax saving FD scheme where you get 16.64% returns & for senior citizens it is over 17.5%. But for us on forum, we should stick to 16.64%, that too with tax benefits. Here the money more than doubles with 100% assurance in 5 years. And at the time of withdrawal too, no stuff like capital gains tax. Enjoy.
    This Tax Saving will have a ceiling like not more than 10k, including interest on your savings deposit, or some such ridiculous limit that completely negates the whole thing.

    This is very similar to the 100% Cash back offers by retailers and credit card companies where the small print says, not more than Rs 500!

    Better stick to making money in more innovative (and risky) ways and paying tax. At least one can scale this way!

    cheers

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by realacres View Post
      +1 & hell with RE.

      SBI has started a new Tax saving FD scheme where you get 16.64% returns & for senior citizens it is over 17.5%. But for us on forum, we should stick to 16.64%, that too with tax benefits. Here the money more than doubles with 100% assurance in 5 years. And at the time of withdrawal too, no stuff like capital gains tax. Enjoy.
      where can we get more information about it?

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Thanks for the info frugal. 8% dip in 2 months in really fantastic.
        RE bulls should look at such news as well.

        Originally posted by punerebuyer View Post
        where can we get more information about it?
        It is called 'Tax Saving Deposits' & are covered under 80C of IT act.
        The only issue is that one can invest only max 1 Lac in single financial year. So, every year, you can keep putting 1L in this scheme.
        The details can be found at nearest SBI branch or visit :: STATE BANK OF INDIA :: Safe Banking With SBI ::, go to Deposits section & select Tax Saving Deposits. All details are there.
        If you are happy, you are successful.

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          RBI keeps key rates unchanged

          The Reserve Bank of India (RBI), on Tuesday, kept the indicative policy rates and Cash Reserve Ratio (CRR) unchanged, reiterating that it would ease the policy in the fourth (January-March) quarter.

          “In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards,” the RBI reinforced in its third mid-quarter review of monetary policy.


          The Hindu : Business / Economy : RBI keeps key rates unchanged

          Apart from this, the GDP growth was just 5.3% & Consumer inflation was about 10% !!
          If you are happy, you are successful.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by realacres View Post
            +1 & hell with RE.

            SBI has started a new Tax saving FD scheme where you get 16.64% returns & for senior citizens it is over 17.5%. But for us on forum, we should stick to 16.64%, that too with tax benefits. Here the money more than doubles with 100% assurance in 5 years. And at the time of withdrawal too, no stuff like capital gains tax. Enjoy.
            Realacres,

            Seriously , I was shocked to see your immature joy for this scheme.where real yields are around 8.5 % only.
            Look for the analysis below.

            ----------------------------------------------------------------------

            It does not show the taxes one has to pay on the interest earned. People who are in 30% tax bracket for showing the benefit go magically into the zero percent tax bracket.. As tax payable on the interest earned is not shown. It shows only the pre tax benefit on deposits. Ignoring the impact of taxes on the interest earned.

            Serial No particulars Senior Citizens Others

            a Investment Amount 10000 10000

            b Immediate Tax Savings 3090 3090

            c Effective Investment (a-b) 6910 6910

            d Maturity Amount of original investment 16,187.49 15,796.98

            e Total Pre Tax Benefit on Deposit (d-c) 9,277.49 8,886.98

            f Rate of Interest 9.75% 9.25%

            g Effective Annual Yield (5 years) 18.55 17.77

            Tax on interest 1,861.81 1,744.31

            h Interest After Tax 4,325.67 4,052.67

            i Maturity Value After paying taxes 14,325.67 14,052.67

            j Effective yield after taxes on Interest Income 8.65 8.11

            If the tax benefit is not applicable (which is most likely the case if your annual income is above Rs 6 lakhs per year. Your PF and insurance most likely already touch Rs 1 lakh and you will not get the tax benefit shown in the table above). Your actual returns are shown in the table below.

            Serial No particulars Senior Citizens Others

            k Investment Amount 10000 10000

            l Immediate Tax Savings 0 0

            m Effective Investment (a-b) 10000 10000

            n Maturity Amount of original investment 16,187.49 15,796.98

            o Total Pre Tax Benefit on Deposit (d-c) 6,187.49 5,796.98

            p Rate of Interest 9.75% 9.25%

            q Effective Annual Yield (5 years) 12.37 11.59

            r Tax on interest 1,861.81 1,744.31

            s Interest After Tax 4,325.67 4,052.67

            t Maturity Value After paying taxes 14,325.67 14,052.67

            u Effective yield after taxes on Interest Income 8.65 8.11


            ----------------------------------------------------------------------------


            And Everybody on IREF hail you as Investment guru !!! No wonder All will lose going by your advice.

            And now i know the level of RE bears Camp ,as you are in that camp

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by amitgupta00 View Post
              Realacres,

              Seriously , I was shocked to see your immature joy for this scheme.where real yields are around 8.5 % only.
              Look for the analysis below.

              ----------------------------------------------------------------------

              It does not show the taxes one has to pay on the interest earned. People who are in 30% tax bracket for showing the benefit go magically into the zero percent tax bracket.. As tax payable on the interest earned is not shown. It shows only the pre tax benefit on deposits. Ignoring the impact of taxes on the interest earned.
              First of all, buyers who talk about 50L or more flats in Pune are in 30% tax bracket in anycase. So, lets assume it to be 30% only & for this particular section, this is indeed one of the good schemes than conventional FDs. Ofcourse, there are better options for tax savings under 80C but if one is looking strictly at FDs (secured), then there is no harm in this at all. Please look at the context man. Ever seen RE bull talking about capital gains tax of 30% when he does YoY returns calculation ?

              Here is the other calculation for people falling in 30% tax bracket :-

              Senior Citizen Others
              Amount (In Rupees) Amount ( In Rupees)

              A Investment Amount 10000 10000
              B Immediate Tax Savings 3090 3090
              C=A-B Effective Investment (A-B) 6910 6910
              D Maturity Amount 16187 15797
              E=D-C Total Pre-Tax Benefit 9277 8887
              F Rate of Interest 9.75% 9.25%
              G=D-A Total Interest Income 6187 5797
              H Tax on Interest Income 1912 1791
              I Earning Post Tax 4275 4006
              J Maturity Amount Post Tax 14275 14006
              K Effective Annual Yield (5 years) 15.61 15.17

              Think about 30% guys also, after all they are the most eligible bakras in today's RE market .
              If you are happy, you are successful.

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by realacres View Post
                First of all, buyers who talk about 50L or more flats in Pune are in 30% tax bracket in anycase. So, lets assume it to be 30% only & for this particular section, this is indeed one of the good schemes than conventional FDs. Ofcourse, there are better options for tax savings under 80C but if one is looking strictly at FDs (secured), then there is no harm in this at all. Please look at the context man. Ever seen RE bull talking about capital gains tax of 30% when he does YoY returns calculation ?

                Here is the other calculation for people falling in 30% tax bracket :-

                Senior Citizen Others
                Amount (In Rupees) Amount ( In Rupees)

                A Investment Amount 10000 10000
                B Immediate Tax Savings 3090 3090
                C=A-B Effective Investment (A-B) 6910 6910
                D Maturity Amount 16187 15797
                E=D-C Total Pre-Tax Benefit 9277 8887
                F Rate of Interest 9.75% 9.25%
                G=D-A Total Interest Income 6187 5797
                H Tax on Interest Income 1912 1791
                I Earning Post Tax 4275 4006
                J Maturity Amount Post Tax 14275 14006
                K Effective Annual Yield (5 years) 15.61 15.17

                Think about 30% guys also, after all they are the most eligible bakras in today's RE market .


                Who told you buyers who buy about 50L or more flats in Pune are in 30% tax bracket ??
                All Hard Cash ....
                Like some boarder here like Gandabaccha minting 3 lakh/pm all in black .

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  RA was talking about white-money folks.....also these FDs are for these folks. I don't think anyone with black money will invest in tax saving FDs.

                  Also folks with black money will spend time in buying RE, rather than be present in this forum...right ? Every hour they are supposed to earn thousands/lakhs, why waste time on this forum and lose money.

                  Originally posted by amitgupta00 View Post
                  Who told you buyers who buy about 50L or more flats in Pune are in 30% tax bracket ??
                  All Hard Cash ....
                  Like some boarder here like Gandabaccha minting 3 lakh/pm all in black .

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Realacres and other FD bulls,

                    1. Tax saving FDs are offered by almost all banks. What is the max amount that can be invested in the SBI scheme? As far as I know, it is max 1 Lakh only (the limit of 80C). Practically, PF already covers a part of it, say 50k. So you are left with 50k as max amount to be invested in this.

                    Can this even be compared with real estate investments (leave alone real estate for end use), which run in to tens of lakhs????

                    2. Even interest on tx saving FD is taxable. You don't want to consider that. But you want to consider capital gains tax in case of RE? At least CG Tax in case of RE can be saved by reinvesting the profit. And, the lock-in period is only 3 years.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by punerebuyer View Post
                      I think enough discussion has happened on this

                      Considering the interest payment and capital gain taxes, the returns probably just beat te inflation if you get a buyer at that price... Do the calculations yourself.
                      I always do the calculations myself. And that's why I dare to post them for scrutiny. It is very easy to make vague statements like "A is better than B".

                      capital gains tax FD me bhi hota hai. RE me to fir bhi save kar sakte hain reinvest karke.

                      Agar 5 saal me double hota hai, to ye hai simple calculation:

                      Purchase price in 2005 = 100
                      Sale price in 2010 = 200

                      indexed cost of acquisition = (CII for 2010/CII for 2010) * purchase price

                      (711/497) * 100 = 143

                      Gain = 200 - 143 = 57

                      Tax = 20% of 57 = 11.4

                      Net profit = 200 - 11.4 - 100 = 88.6

                      YoY gain POST TAX = 13.5%

                      This is already beating any bank FD, and most corporate FDs. We haven't even considered the rental income, which stands at 2% using conservative estimates.

                      Comment

                      Tags: None
                      Have any questions or thoughts about this?
                      Working...
                      X