It is safe to say that post demonetization of the Indian currency, even the people who were not into owning assets and making investments started thinking in that direction. Soon everyone started considering real estate and gold as the stars of the financial security business.
Gold and real estate have traditionally positioned themselves as the emperor and empress in the journal of Indian investors. Although, over the span of the last few years, returns from real estate have been negative to poor. On the other side of the coin, gold too, is not giving attractive returns in the long term and has high transaction cost.
Apart from keeping real estate or gold for own use, investments in these 2 asset classes do not make much sense financially. However, if in case an investor chooses to reduce the exposure to real estate and gold, they will have to pay attention to the applicable tax rules.
Here is a look at the taxes that apply to short-term and long-term gains from these two asset classes:
Gold: Long-term capital gains tax (more than 3 years) 20.8% with indexation (use cost inflation index to calculate)
Sovereign gold bond: Long-term capital gains tax – 20.8% with indexation (for unlisted bonds and listed transferred before maturity); no tax immunity. (long-term –more than 3 years)
Real estate: Short-term capital gains tax 20.8% with indexation (use cost inflation index to calculate)
Investing in real estate can be a game-changer in your life. We hope that you are making your investments wisely and smartly.