Investing in stocks and Capital Gains Tax

Did you know that Long term Capital Gains tax in India on securities transactions (selling stocks) is zero?  Equities are considered long term if the holding period is more than one year.  The short term capital gains tax, however, has increased to 15% from the earlier 10%.

In the US, of course, the investors have no such luxury, where the short term capital gains are taxed at normal income tax and the LTCGs are taxed at 15%. With this being said, there are certain tax advantages or loopholes that investors can use to avoid having to pay such high rates. For example, real estate investors can do a 1031 Exchange and defer their capital gains taxes by swapping of one investment property for another. This is just one example of the tactics they can do as it’s different for each industry.

Malaysia of course has it the best, where there is no Capital Gains tax for equities.  Even for Real Estate, while there is no Capital Gains tax, there is a 5% real property gains tax (RPGT) for properties sold less than 5 years from its date of purchase.

Guess where you would invest and in what?  But if you look at the small investors in India, you will be surprised to know that India has a proliferation of trading transactions – inviting short term capital gains tax.  Why would someone do that is beyond imagination.  Especially, when the economy is robust.

But, hey the corrupt politicians – who really get to keep the tax payers moneys – don’t complain a whole lot.. do they?

Even though investors have apps like Etoro, they still have to factor these amounts in for every sale. Using a platform like Etoro is a good way for beginners to start investing or just people who don’t have much time to keep an eye on the stock market. Someone has written about their etoro Erfahrungen (etoro experiences) so be sure to take a look if you’re wondering whether or not you should get the app. If I were to buy real estate, I would probably buy it in Malaysia.  Of course, there are lots of different pros and cons that you need to weigh up but Malaysia makes the most sense to me.  And the good news is that the Malaysia real estate market is especially hot.  Here is the process of buying Malaysian property:

Once you have selected your property, a Letter of Offer and Acceptance is signed and a 3% deposit payment is normally expected from the purchaser.

Within 14 days, the buyer must pay a further 7%. Deposits paid are non-refundable if the buyer withdraws from the sale but are subject to obtaining finance and checking of title deeds. Make sure that there is a clause added to the standard agreement, stating that if the vendor pulls out, they must pay back the deposit plus an amount equal to that to the investor for the inconvenience. From the date of the signing, the buyer normally has a maximum of three months to complete the sale and make full payment.

Upon signature, the Sale and Purchase Agreement must be stamped at the Stamp Office. After examination of the property by the valuation department, Stamp Duty must be paid to the Stamp Office. The Sale and Purchase Agreement is then sent to the land registry along with the Memorandum of Transfer form 14A to transfer the title deeds into your name.