Buy a house to save more tax
Investment in a house could be the best way to save tax. As prices of residential units have gone up in the range of Rs 50 lakh and over, tax experts say buying a second house for investment purpose will save even more tax than that over the first house you bought for personal use.
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Thank god it was an advice from a tax expert and not from an economist!!
Demand driven by investment needs has different characteristics than the one driven by consumption needs. The demand curve is upward sloping in the former case.
In an investment scenario a vicious cycle starts- Everyone starts demanding goods for investment purposes thinking (hoping) that there will be someone out there who would be willing to buy this good at a higher price. This is also known as greater fools theory.
This is a zero sum game. Somebody has to loose and somebody has to win. Investment returns are dependent on uncertainity on future. Clearly, if everyone knew how prices would change in the future then everybody would become a bear or a bull and their would be no one on the other side.
However, these are VERY uncertain times. As an individual living in such times, I will definitely not be buying any houses in near future!
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