Property was acquired for ₹36 lakhs in 2009, and its current top market value is estimated around ₹60 lakhs. With indexation adjustments, the value rises to roughly ₹88 lakhs, implying an effective shortfall of about ₹28 lakhs that can be adjusted. However, a 12.5% tax applies on a sum approximating ₹24 lakhs for a loss-incurring asset. This scenario highlights the significance of indexation benefits in offsetting the typically lower returns from real estate investments.
The removal of indexation benefits certainly alters the property investment landscape. In my experience, the tax efficiency of indexed assets used to make property investments more attractive than many other avenues over the long haul. Without these adjustments, the effective yield is reduced, thereby narrowing the margin between real estate and other investment options. I carefully recalculated potential returns before my last investment, taking into account the impact on capital gains taxes. Consequently, I now favor a more diversified portfolio, where risk and taxation are balanced more evenly across asset classes.