The high requirement of per month investment comes from the fact that you have left the creation of retirement corpus for such a late time
This is with regard to what has been proposed in the Union Budget 2017. Both my houses are jointly owned with my wife, with each of us having 50? holding. Can we both claim Rs 2 lakh respectively for each house as rebate in interest amount, ie 4 lakh X 2 lakh = 8 lakh? If not, how much can we claim? And, what are the means for reducing tax outgo?
-Milind
There is a misconception about the changes proposed in the Union Budget of 2017 regarding the deduction of interest payable on a loan taken to acquire a house property. Firstly, the proposed changes will apply only from the next financial year and will not be applicable to the current financial year ending March 31, 2017.
Secondly, what is restricted is the carried-forward loss under the head income from house property and not the deduction for interest. Let me illustrate the difference between the two by taking some assumptions in your case. If both your properties are valued at say Rs 1 crore each and each has a loan of around 60 lakh on them (30 lakh for each of you) and the interest payable every year is Rs 6,00,000 (Rs 3 lakh for each of you). Also, let's assume the houses if rented out, could have fetched Rs 1,50,000/- per annum (Rs 12,500 per month) net of municipal taxes. Let's further assume that both houses are self occupied by you. Then, your calculation of income from house property for each of you will be as follows.
Property 1
Annual Value – taken as NIL
Less : Interest payable restricted to – Rs. 2,00,000
Loss from House Property 1 – -Rs. 2,00,000 (A)
Property 2
Annual value (taken as notional rental value) – Rs. 75,000
Less : Interest Payable -- Rs. 3,00,000
----------------------
Loss from House property 2 -- Rs. 2,25,000 (B)
Total loss from Hose property (A) + (B) = Rs. 4,25,000
Out of this you will be allowed to set off Rs. 2,00,000 against any of your other income.
Balance to be carried forward to future years Rs. 2,25,000
This can be set off against income from house property in the future for eight years
I am 51 years old, working in a private company. I have Rs 50 lakh in bank and have my own house in Mumbai. I have insurance plan and mediclaim plan also, but do not have a pension plan. I want to have atleast Rs one lakh income every month after retirement to meet expenditure for myself and my wife. I am still working and can invest in mutual fund. Please advise me which investment plan would meet the above requirement.
-Kishore Kumar
To get a pension you don't have to go for a plan that has the word "pension" in it. In fact another word to avoid is "guaranteed return". If you read the word "guaranteed return" in any advertisement substitute it for "low return" and then re read the advertisement to see if it still makes sense.
Please plan for this properly. You are just not taking inflation into account properly . You are still only 51 years old. Assuming you will retire at 60 years. You have to plan for at least 25 years more till you reach the age of 85 years. If your spouse is much younger than you are you need to plan for an even longer number of years post retirement. I am assuming you think Rs. 1 lakhs per month will be sufficient for your retirement. Just to put it in context Rs. 1 lakh per month after 9 years is equivalent to around Rs.50,000 pm in todays money. Assuming that is fine you will need to ensure that you generate a corpus of around Rs. 3 crore approx. by the time you are 60 years old to be able to get the monthly pension of Rs. 1 lakh per month adjusted for inflation year after year for 25 years. The Rs. 50 lakhs in your bank will have to generate a return of 22%+ p.a. to get to the figure of Rs. 3 crore. Clearly that is not a realistic assumption. You will need to supplement with regular investments to build the corpus to Rs. 3 crores. If you are willing to invest in equity mutual funds and assuming a return of around 12.60% you will need to further invest Rs. 72,000 per month apart from the current corpus of Rs. 50,00,000 to reach the magic figure of Rs. 3 crore. The high requirement of per month investment comes from the fact that you have left the creation of retirement corpus for such a late time.
Harsh Roongta is a CA and Sebi-registered investment advisor. Send your queries to personalfinance@dnaindia.net or tweet them to @AskHarshdna
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