I Want To Sell My Land: How Can I Maximize My Profit And Secure My Future?

Ans: The biggest change is that the benefit of indexation gets withdrawn. In simple terms, now you cannot adjust the purchase cost of the property for inflation to bring down your taxable capital gains.

Flat Tax Rate: The LTCG from property shall now be taxed at a single 12.5% plus applicable cess.

The base year for computation of capital gains in respect of properties acquired before April 1, 2001, has now been shifted from 1981-82 to 2001-02.

Point to Note:
Fair Market Value (FMV) as on April 1, 2001: You may opt to consider the FMV of the property as on April 1, 2001, as your cost of acquisition for the purpose of computing capital gains.

Assuming you opt for FMV as on April 1, 2001:

FMV as on April 1, 2001: Rs. 32 Lakhs (as per your valuation report)
Sale Price: Rs. 5 Crores
Capital Gain: Rs. 5 Crores - Rs. 32 Lakhs = Rs. 4.68 Crores
Tax: Rs. 4.68 Crores * 12.5% = Rs. 58.5 Lakhs
Availing LTCG
1. Section 54EC Bonds:

Invest the amount of LTCG in bonds issued by NHAI, REC, IRFC, or PFC within 6 months from the date of sale.
You can claim full exemption from tax on LTCG.

2. Section 54F:

Invest in a new residential house within 2 years from the date of sale.
You can claim exemption from LTCG tax to the extent of the cost of a new house.

3. Capital Gains Account Scheme:

Deposit the amount of LTCG in a Capital Gains Account Scheme within 6 months from the date of sale.
You get 3 years to invest in a new residential house.
If invested within 3 years, no LTCG tax is payable.

Flats Purchase
There is no specific limit as to how many flats one can purchase from the sale proceeds. However, if you are investing the amount to claim exemption under Section 54F, the property should be for self-occupation.

Loans and Tax Implications
You can use the sale proceeds to repay your loans, including the ones taken in October 2023. But it will not qualify for LTCG exemption. In case you fail to invest the LTCG amount to claim exemption, then you will have to pay tax on the LTCG as computed above. However, the property purchased on October 2023 can be considered for LTCG exemption. Please consult a tax advisor one on one to get clarity on this.

Best Ways to Invest and Save on LTCG
Prioritize Section 54EC bonds for full exemption.
If you plan to buy a new house, consider Section 54F or CGAS.
Consult a tax professional for other possible ways of saving taxes that might pertain to you.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

Following can be earmarked towards house purchase in Delhi(2.25 Cr):

1. Sale of RE property worth 90 L.

2. EPF balance of 30 L.

3. Direct stocks worth 80 L.

4. Part of MF balance worth 25 L.

Balance 1 Cr corpus in MFs will grow 1.25 in 2 years time frame.

50 L maybe allocated for son's higher education.

Balance 75 L may remain in mutual funds for additional 5 years.

Also you may begin a monthly sip of 2 L into a combination of pure equity mutual funds for 7 years duration.

The 75 L lumpsum and 2 L monthly sip will grow into sums of 1.32 Cr & 2.64 Cr respectively.

Hence your total corpus would be 3.96 Cr

You may utilise ~ 1 Cr for daughter's education and marriage.

If you utilise the balance 3 Cr to buy an immediate annuity from a life insurance company, you may expect a monthly income of 1.10 L(post tax).

This alongwith your monthly pension of 1 L will lead to a comprehensive retirement monthly income of 2.1 L.

Happy Investing;

Ans: You have clearly outlined your financial position, goals, and decisions you are considering. It shows thoughtful planning and awareness about your future needs.

You have accumulated a solid financial base with multiple income-producing assets and long-term investments.

Now, let’s assess your situation from all angles and provide detailed suggestions for your post-retirement and daughter’s education planning.

Real Estate Decision – Flat or Plot?
You are considering a 2 BHK flat in Mumbai or Pune for Rs. 85 lakhs.

Around 70% of this cost would be through a home loan.

Alternatively, you are considering a 2000 sq.ft plot in Nagpur for Rs. 40 lakhs.

You already own two flats – one in Mumbai and one in Nagpur.

One of them is debt-free. The other has an EMI of Rs. 20,000 per month.

Adding a third property with a high loan burden may not be ideal.

Real estate is illiquid. It takes time to sell when needed.

Rental income is usually low in proportion to property cost.

Maintenance, taxes, legal costs, and vacancy risks reduce actual returns.

Real estate requires time, management, and ongoing financial attention.

Holding too much of your net worth in property creates concentration risk.

In your case, more real estate investment is not recommended.

You already have sufficient exposure through two flats.

Inflation in Property: Flat vs Plot
Over the next 10 years, inflation in property can vary across cities.

Flat prices usually grow at 5% to 7% per year.

But this is before deducting maintenance, property tax, and loan interest.

Plot prices may grow better in tier 2 cities like Nagpur.

Plot returns depend on location, infrastructure, and demand growth.

Historically, land appreciates better but does not generate any cash flow.

Flat gives rental income but has lower appreciation due to depreciation.

In the next decade, even 6%-8% annual growth will be considered decent.

So, neither flat nor plot is a guaranteed high-return asset.

That’s why mutual funds with flexibility and compounding are better long term.

Thinking of Shifting to Nagpur After Retirement?
You are thinking of settling in Nagpur post-retirement.

That is a clear and positive plan.

In this case, it’s not urgent to buy a plot right now.

You can wait and assess the locality and infrastructure after a few years.

Plot can be purchased 3 to 5 years before you need to build.

This gives you better clarity of available choices and better prices.

You also avoid keeping funds blocked in an idle land.

That money can work better for you in mutual funds and long-term growth options.

Later, you can buy a plot with maturity money from mutual funds, LIC, or FDs.

So, there is no need to rush into plot purchase today.

Should You Invest Rs. 40 to 85 Lakhs in Real Estate Now?
No, that may not be the most optimal decision.

Instead of investing in a third property, consider diversifying.

Real estate makes sense only when there is long-term use or rental value.

Mutual funds offer better liquidity, flexibility, and compounding benefits.

At 49, it’s time to make wealth work efficiently, not just grow size.

You can earn higher real returns through well-selected equity mutual funds.

Mutual funds also give you the option to withdraw as per need.

Property cannot be partially sold or withdrawn when needed.

Focus on financial assets that align with future expenses and goals.

Assessment of Current Investment Position
Monthly SIP of Rs. 25,000 is a strong and consistent investment habit.

Your mutual fund portfolio is around Rs. 20 lakhs. That is a good base.

Equity long-term capital gains are well-positioned for goal-based compounding.

PPF corpus of Rs. 6 lakhs adds safety and tax-free return.

LIC premiums of Rs. 2.22 lakhs per year need closer review.

Maturity value is around Rs. 50 to 60 lakhs across different policies.

Life risk cover of Rs. 80 lakhs is there. That offers some protection.

You also have Rs. 25 lakhs in FDs for immediate use.

Mediclaim cover of Rs. 25 lakhs is very good. It gives peace of mind.

All in all, your foundation is stable. But it can be sharpened.

What to Do With LIC Policies?
Review each LIC policy individually.

Check surrender value and maturity benefit vs premium paid.

If returns are below 5% annually, they are destroying your wealth.

Traditional insurance gives very low returns due to high costs.

Surrender poor-performing LIC policies and reinvest in mutual funds.

Use the maturity of good policies to support post-retirement needs.

Avoid mixing insurance and investment in future. Keep them separate.

Buy pure term cover for protection. Use mutual funds for investing.

This brings clarity, better returns, and tax-efficiency.

Planning for Daughter’s Education
Your daughter is 5 years old. Higher education will begin in 12 years.

That gives you a good time horizon to build a separate corpus.

Open a child goal SIP in a multi cap or balanced advantage fund.

Start investing minimum Rs. 10,000 per month towards this goal.

Step it up by 10% every year to match your income growth.

Keep this SIP separate from your retirement portfolio.

Do not mix children’s education fund with any other goal.

Track this goal using a calculator and review yearly.

Use long-term capital gains above Rs. 1.25 lakh judiciously as per new tax rules.

Enhancing Your Post-Retirement Plan
Post-retirement income should come from a mix of safe and growth assets.

Mutual funds in SWP mode give flexibility and steady income.

FD can be kept for 3 to 4 years of expenses for safety.

PPF maturity, LIC maturity, and NPS maturity should be staggered.

SIPs should be continued till age 60 and even beyond if possible.

Avoid holding excessive FD and real estate beyond 60 years.

Build at least Rs. 2 crores retirement corpus by age 60.

For that, continue SIPs with 10% step-up, focus on equity and hybrid funds.

Reduce property burden. Avoid taking large new loans now.

Invest more in mutual funds with the Rs. 25 lakh FD amount.

That will compound better and give you flexibility later.

Reallocate idle LIC premiums to higher-return options gradually.

Additional Suggestions
Do not invest in direct equity unless you can track daily.

Equity investing requires deep research, risk handling, and continuous tracking.

Instead, choose regular mutual fund plans with help of CFP.

Regular plans provide advisory, behavioural guidance, and rebalancing support.

Direct plans do not give any handholding or personalised planning.

Retirement, education, and healthcare goals need guided planning.

Avoid index funds. They lack downside protection and are rigid.

Actively managed funds perform better with fund manager strategies.

You can opt for balanced advantage funds in later years for stability.

Track inflation at 6% average for expenses. Use 8% return expectation for planning.

Do not overspend or overcommit in large-ticket assets now.

Finally
You are financially disciplined and forward-thinking. That is a strong quality.

Avoid new flat or plot now. Real estate already has high exposure in your portfolio.

Mutual funds will give you better returns, liquidity, and peace of mind.

Start separate SIPs for your daughter’s education. Keep it focused and growing.

Revisit all LIC policies. Exit low-return ones and shift to equity funds.

Invest your Rs. 25 lakhs FD in staggered manner into quality mutual funds.

Don’t increase loan burden. At age 49, focus on building financial flexibility.

Balance growth with safety. Mix equity, hybrid, and debt in right proportion.

With 10 years to retirement, create a clear retirement income strategy.

Continue protection with term cover and mediclaim. Those are non-negotiable.

Track goals yearly. Seek help from a Certified Financial Planner for a personalised plan.

The key to retirement success is goal-based investing, not asset hoarding.

Your wealth must support your dreams and responsibilities with ease.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment