You must pay 20% tax on your property gains after two years. You get indexation benefits, though.
Don't keep your gains with you for more than two years after selling the property. You'll be taxed. It's best to invest the money.
1. Reinvest in real estate 2. Capital gains bond 3. An equity-oriented mutual fund
1 year before selling the property or within two after selling it. You get 3 years' time for constructing a home on a plot.
If the new home costs less than your original gain, the differential amount will be taxed at 20%.
1. Property prices are speculative. Therefore, risky 2. Demands attention 3. Finding tenants can be tough 4. Low rental yield (only 2-3%)
Pros: You get guaranteed returns. These are backed by the government Cons: Low annual return (around 5.25%); 5-year lock-in period
Go for either aggressive hybrid or flexi-cap funds. They have higher potential returns despite you having to pay 20% property gains tax.
1. Pay the property gains tax upfront 2. The remaining amount can be put in either fund 3. Spread investment over 24 -36 months via SIPs
A. If you are a safe investor, opt for capital gains bond B. If you can withstand volatility and want better returns, opt for flexi-cap or aggressive hybrid funds