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I Sold 2 Properties: How to Calculate Capital Gains and Best Investment Options?

Ramalingam Kalirajan |7047 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 26, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Jun 03, 2024Hindi

Recently I sold two properties, which are one in joint name with my wife on which I got net 27 lacs (after prepayment of home loan of 27 lac), and another in my wife's name from which we got 10 lacs. Now my queries are: 1. I don't want to buy any property, so how to calculate the capital gain on both properties. By when I have to buy the bond. 2. What could best investment for the balance amount (capital gains bond amt)? (I am 46 years' service personal, in family wife and daughter 15 years in class X, our total monthly income around 1.6 lac. we have saving around 30 lac PF, 1.25 lac PPF, 5 lac NPS, 10 lac MF and 1 lac Shares). This investment for long term, I can take medium risk.

Ans: Property in Joint Name
Net Proceeds: Rs. 27 lacs
Prepaid Home Loan: Rs. 27 lacs
Calculate capital gains on your share.
Property in Wife's Name
Net Proceeds: Rs. 10 lacs
Calculate capital gains considering her holding period and purchase price.
Capital Gains Bonds Investment
Timeline
You need to invest in capital gains bonds within six months. This helps save on capital gains tax.

Bond Selection
Invest in government-approved capital gains bonds. They offer a safe way to defer taxes.

Best Investment Options for Balance Amount
Diversified Equity Funds
Equity Funds provide long-term growth. They suit your medium risk appetite.

Balanced Advantage Funds
Balanced Funds offer stability and growth. They mix equity and debt for balanced returns.

National Pension System (NPS)
You already have NPS. Consider increasing your contribution. It offers tax benefits and retirement savings.

Public Provident Fund (PPF)
PPF is a safe long-term investment. It offers tax benefits and assured returns. Increase your contributions here.

Benefits of Actively Managed Funds
Professional Management
These funds are managed by experts. They aim to outperform the market.

Higher Returns Potential
Actively managed funds often deliver better returns than index funds.

Disadvantages of Index Funds
Limited Flexibility
Index funds follow the market. They don’t adapt to market changes.

No Active Management
Index funds lack active management. This limits their growth potential.

Disadvantages of Direct Funds
Lack of Guidance
Direct funds lack professional advice. This can be challenging for investors.

Time-Consuming
Managing direct funds requires time and knowledge. This may not suit everyone.

Final Insights
Investing your capital gains wisely is crucial. Use capital gains bonds for tax savings. Diversify your remaining funds in equity, balanced funds, NPS, and PPF. Actively managed funds offer better growth. Avoid index and direct funds due to their limitations. Regularly review and adjust your investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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