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| Buying a House? Consider this... Posted: 21 Nov 2012 04:02 AM PST Call 0 94 8300 8300 (India) If the house you are planning to buy is a second home, then 30 per cent of rent can be set off as expenses BEFORE scrambling to buy a home, you should consider a few aspects.
First, whether you are buying a house as a residence or as an investment? If it is for residential, the most important thing to ask is, whether you would continue to live in the same city? There are people who have bought a home and then had to move to another city and have put their house on rent. It beats the purpose of acquiring the house in the first place. But if you have bought a house for availing of tax break, think again. A Rs 1,00,00,000 home with probably a Rs 70,00,000 loan, hardly offers a tax shelter worth speaking of. Home loan offers up to Rs 1,50,000 deduction on interest. The loan interest a person may be paying would be over Rs 5,00,000. If this home is a second home, then things become interesting – 30 per cent of rent can be set off as expenses; the interest paid on the home loan can be set off entirely against the balance rental income. In some cases, this may show a loss. Only the balance income or the loss is added to the gross taxable income. This becomes advantageous when one has taken a huge loan to service a property. The other important aspect to consider is the kind of property to buy and the price up to which one could stretch oneself. Many get excited when they see some interesting property. When they are 'sold' on some property, they tend to lose their rationality and seek every possible means to acquire it even if the price is way beyond what they had budgeted for. That locks them into loans, which they would find onerous to service. Even a small-unforeseen financial expense can spell crisis for such people. Only the balance income or the loss is added to the gross taxable income. This becomes advantageous when one has taken a huge loan to service a property. The other important aspect to consider is the kind of property to buy and the price up to which one could stretch oneself. Many get excited when they see some interesting property. When they are `sold' on some property, they tend to lose their rationality and seek every possible means to acquire it even if the price is way beyond what they had budgeted for. That locks them into loans, which they would find onerous to service. Even a small-unforeseen financial expense can spell crisis for such people. Things to consider before buying a home are: Before seeing any property at all, you need to be clear whether they really want to buy the property in that city. Thinking that you can always sell it, is not a great idea in itself because properties are not really liquid.
After that, you need to decide on how big a property you want to buy, in which locality and the price point up to which you are comfortable. This clarity is important as otherwise, people look at all kinds of property, get confused and end up stretching themselves financially. When buying a property, you have to budget for registration and stamp duty, brokerage, other incidental expenses, interior work, and add all these to the cost.
When buying on loan, it is better to increase self-contribution as much as practicable, unless the loan is really low-cost. If the loan EMI is more than 40 per cent of your net income, it would be a good idea to start prepaying at regular intervals. Provisioning for this from the beginning is a good idea. Also, when the tenure extends be yond your retirement age, it is a good to prepay and get it within your working tenure. For people with irregular incomes, the amount of payment upfront should be higher compared to someone in service. Also, they should consider prepaying as and when they get lump sums and reduce their exposure. Consider the ongoing costs in the home you are buying as that can impact you adversely over time. A resale property might have lower outgoings compared to a new property. When considering a property, evaluate whether you might really be using the amenities such as gymnasium and swimming pool, otherwise, you will still have to pay for them. Before signing on the dotted line ensure that the papers are in order. An easy way here is to apply for a loan and the papers are automatically vetted for you. If the loan is sanctioned after the due process, it would mean that the papers are in order. Buying a home is an important decision. You need to consider all aspects before you conclude your purchase.
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| Posted: 21 Nov 2012 03:21 AM PST Call 0 94 8300 8300 (India) It is a part of the takeover code as defined by the Securities and Exchange Board of India (Sebi). When a company acquires up to 15 per cent stake in another listed entity, an open offer gets triggered. This means the acquiring company must make an offer to existing shareholders to buy an additional 20 per cent stake in the company. And, it is typically kept open for about a month, from the date of announcement. It is aimed at providing the shareholders an exit option, as there may be a management change post-acquisition and investors may perceive potential risks in the business. What is the acceptance ratio? The ratio between total shares tendered (offered for sale to the acquirer by the existing shareholders) and those accepted by the acquirer is termed as the acceptance ratio. Simply put, the share acceptance by the acquirer is done on a proportionate basis. The lack of a guarantee of 100 per cent acceptance is a hitch. As in case of partial acceptance, prices may fall post offer and one may have to sell the residual stocks at a lower rate. How is the price of the shares fixed? The acquirer, in concert with the merchant banker, considers the following parameters while determining the offer price: negotiated price under the agreement that triggered the open offer; price paid by the acquirer for allotment in a public or rights or preferential issue during the 26-week period prior to the relevant date or the date when the open offer was triggered; and the average of the weekly high and low of the closing prices of the shares during the six months. Or, the average of the daily high and low prices of the shares during the two weeks preceding the relevant date. The highest price of these is considered. And, it has to be mentioned in the letter of offer, along with a justification. How are the shareholders intimated? The acquirer has to publish a public announcement in newspapers. It can be also viewed on the Sebi website, along with the letter of offer and form of acceptance. The letter of offer is a document addressed to shareholders of the target company. It contains disclosures of the acquirer, details about the offer price, number of shares to be acquired, purpose of acquisition and future plans of the acquirer. It also specifies the procedure for accepting the shares tendered by the shareholders.The public announcement will also specify the procedure for tendering your shares, in case you do not receive the letter of offer. What are the tax implications? The income is added to the taxpayer's 'other income' and taxed, according to the slab applicable. Comparatively, if you sell over the exchange, there will be zero capital gains tax, if the stock is held for more than a year. If held for less than a year, it will attract a short-term capital gains tax of 15 per cent.
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| Posted: 21 Nov 2012 01:07 AM PST Call 0 94 8300 8300 (India) You need to ensure your asset allocation ratio is always in line with your risk appetite. This is even more so when the markets are volatile. A sharp market movement can change the values of specific asset classes in a portfolio.
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Invest Mutual Funds Online
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Invest in Tax Saving Mutual Funds Download Any Application Forms Buy Mutual Funds Online Invest Online Buy Gold Mutual Funds Invest Now  |
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