Expat issues, Foreigners working in India, Dual Taxation, double taxation, claiming tax credits for tax paid in another country, taxes of other countries, Dual taxation, DTAA, Double taxation avoidance agreement, tax saving schemes, tax planning, tax return filing and so on
Let us assume that there is no cost of capital. Available monies (begged, borrowed and stolen) is about 60 Lakhs. Option 1: Buy a site with area 1200 sq ft and build 3 floors to rent
Costs [LIST] Cost is roughly about 30 Lakhs; Rate is about Rs.2500/sq ft Livable square foot is about 2700 sq ft (900 sq ft each floor) Cost of construction is about 27 Lakhs.
Benefits
Expected rents are about Rs. 2,70,000/ year Just land value, without considering the building value, is expected to grow to a conservative Rs.3500/sq ft within the next 5 years – potential appreciation of 12 Lakhs.
[/LIST] Option 2: Buy a site with area 1200 sq ft and build 3 floors to sell
Costs[LIST] Cost is roughly about 30 Lakhs; Rate is about Rs.2500/sq ft Livable square foot is about 2700 sq ft (900 sq ft each floor) Cost of construction is about 30 Lakhs – with bells and whistles to make it saleable
Benefits
Expected sale prices of apartments are about Rs. 27,00000/ unit. Potential for total profit before taxes Rs. 11,00000. Of course, there are indications of oversupply of apartments which may lead to longer time that the property will take to sell.
[/LIST] Option 3: Buy either tax-free Munis (doubt if there is a being like this in India) or build a portfolio of equities. What about annuities?. I know as a USC mutual funds are out because of PFIC.
Costs[LIST] I need input from members of this forum to delineate the costs.
Benefits
I need input from members of this forum to come up with a decent estimate of returns. Risk should be such that the principal is preserved over the long haul.
[/LIST]Please share your thoughts and provide some feedback.
You might also want to take into consideration that putting the 60 lacs in a bank fd might earn you around 6 lacs(less taxes) per annum without any effort.
And if the interest rate sustains at around 10% and you compound it...you will end up with around 1.5 crore in 10 years that is a return of around 9 lacs per annum.
If you don't touch it for 20 years...you will end up with 4 crores....earning @ around 17 lacs per year. Cool, eh?
MadMax;18582You might also want to take into consideration that putting the 60 lacs in a bank fd might earn you around 6 lacs(less taxes) per annum without any effort.[/quote]
Add registration and transaction fees to the real estate purchase. :emsmile:
If it is not your primary residence add wealth tax. :emsmile:
Add repairs after tenant leaves. :emsmile:
Too many high end rentals coming up with less people to rent in that bracket. Expect rents to fall. For this property it may be ok but people may choose to rent bigger place for same rent. :emsmile:
Real estate is always a good idea fro primary residence. At this boom time you might as well bet on few stocks or play little safe in Mutual Funds to get same or higher returns. Bank is always safest. :)
And if the interest rate sustains at around 10% and you compound it...you will end up with around 1.5 crore in 10 years that is a return of around 9 lacs per annum.
Madmax pls let me know how you would compound it - were you implying of just reinvesting the interest?
I see your point and I was more looking at may be investing in equities but because of my USC status I do not think I can invest in PFIC....
hoag2004;18598Madmax pls let me know how you would compound it - were you implying of just reinvesting the interest?
I see your point and I was more looking at may be investing in equities but because of my USC status I do not think I can invest in PFIC....[/quote]
Yeah reinvesting interest. And you don't have to do anything to compound it. The bank does it for you. Just fix it for whatever time and don't touch it. Whatever time is dependent on the bank I think. Most managers I have dealt with have asked me to do 3 years. I think they do this...coz rates keep changing.
With the current environment if you can find anything better than 10% try to lock the rate down for as long as possible. The last time I saw interest rates this good for FD's was back in 95-96.
I dont think 10% interest rate will last for 10 years.. 12 months to 18 months, the int rate should start falling.
If the inflation does not go down to 5%-5.5% level, RBI will go for one more round of raise, either inflation will go down or both growth and inflation will go down.
Also once US starts cutting rate, India can't stay at 10% rate. With a time lag, we may have to do something.
RRK;18720I dont think 10% interest rate will last for 10 years.. 12 months to 18 months, the int rate should start falling.
If the inflation does not go down to 5%-5.5% level, RBI will go for one more round of raise, either inflation will go down or both growth and inflation will go down.
Also once US starts cutting rate, India can't stay at 10% rate. With a time lag, we may have to do something.[/quote]
There is never a sure thing. You should be able to lock in the rate for atleast 3 years. I did that one time....@ 9%...upon maturity the rate had gone down to 6%! Took out the money and invested some in real estate and some in Post Office scheme which I think is yielding us almost 10% p.a.
That is why I said....lock in the good rate for as long as possible.
i think one shouldnt jump into execution if he / she doesnt have the backup or experience. Construction is something which can really make your life miserable.
A better way of working it out is give it for Joint Venture wherein another party builds it for you and than you can give it for rental.
thard;19220i think one shouldnt jump into execution if he / she doesnt have the backup or experience. Construction is something which can really make your life miserable.
A better way of working it out is give it for Joint Venture wherein another party builds it for you and than you can give it for rental.
I totally agree "Construction is something which can really make your life miserable".
Things seem tempting as others are making money while doing this.
