I bought a property sometime in 2014 for 24 lakhs, the property value in the market is 55 lakhs now? I have cleared the loan of 24 lakhs
But now I have bought another property and have 49 lakhs loan on that and want to sell the first one and adjust against this loan?
How does it work? Any help and information is appreciated ????
Ans: Your situation is quite common. Here's how you can manage selling your first property and using the proceeds to pay off your current loan.
Current Situation
First Property Purchase Price: Rs. 24 lakhs in 2014
Current Market Value: Rs. 55 lakhs
Loan on First Property: Cleared
New Property Loan: Rs. 49 lakhs
Selling the First Property
1. Market Value Assessment
Property Valuation: Ensure you have a fair market valuation for your first property. The current value is Rs. 55 lakhs.
Agent Assistance: Consider hiring a real estate agent to help with the sale. They can provide valuable market insights and handle negotiations.
Financial Considerations
2. Capital Gains Tax
As the indexation benefits are not there NOW, 12.5% CG tax, you need to pay.
3. Sale Proceeds Utilization
Loan Repayment: Use the sale proceeds to repay your new property loan. This will reduce your debt burden significantly.
Remaining Funds: If any funds remain after loan repayment, consider investing them wisely for future financial security.
Loan Adjustment Process
4. Loan Repayment Process
Prepayment Penalty: Check if there is any prepayment penalty on your current loan. Some banks charge a fee for early loan repayment.
Lender Coordination: Coordinate with your lender to process the loan prepayment. Ensure you understand all terms and conditions.
Investment Strategy
5. Investing Remaining Proceeds
Mutual Funds: Consider investing any remaining funds in diversified mutual funds. They offer potential for higher returns over the long term.
PPF and NPS: Allocate some amount to PPF and NPS for safe, tax-efficient, long-term growth.
Final Insights
Selling your first property and using the proceeds to clear your current loan is a wise move. It will reduce your debt and free up funds for investment. Regularly review your financial plan and adjust as needed. Seek guidance from a certified financial planner to tailor a plan specific to your needs.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
