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In Mumbai’s ever-evolving real estate market, a wave of high-net-worth individuals (HNIs), including Bollywood celebrities, is selling their luxury properties. But what’s driving this sudden trend? Experts believe it’s a strategic financial move to balance gains and losses in different investment classes.
HNIs are known for diversifying their wealth between real estate and stock markets. With the Indian stock market experiencing volatility in recent months, many investors have seen a decline in their portfolios. At the same time, Mumbai’s luxury property values have surged, making it an opportune time for investors to book profits on their real estate assets.
Tax experts explain that one major factor driving these sales is capital gains offsetting. Investors who incurred losses in the stock market are strategically selling properties to set off long-term capital gains (LTCG) against these losses. This approach helps reduce their overall tax burden while ensuring financial stability.
The Union Budget 2024-25 introduced a revised tax structure for real estate. Initially, Finance Minister Nirmala Sitharaman proposed lowering the LTCG tax on real estate from 20% to 12.5%, but without the indexation benefit. However, after facing criticism, the government revised the provision, allowing homeowners to choose between:
This change prompted many HNIs to reassess their property holdings and optimize their tax savings before any further revisions.
According to Vivek Jalan, a tax consultant, many investors have suffered double-digit losses in stocks while their real estate investments have appreciated significantly. Selling property now allows them to offset losses, thereby reducing tax liabilities.
For instance, an investor selling stocks worth ₹100 crore at a ₹10 crore loss and later selling property for a ₹10 crore profit can save ₹1.25 crore in taxes by offsetting gains against losses.
While overall real estate growth in Mumbai Metropolitan Region (MMR) has been steady, luxury and premium housing segments have witnessed exponential appreciation. Neetu Vinayek, a tax strategist, highlights that some investors may also be hedging against a potential future tax rate hike or a complete withdrawal of indexation benefits.
Industry experts believe that the property sales among HNIs are not just about tax benefits—they are also about portfolio restructuring.
Mumbai’s luxury property market is undergoing a transformation as investors strategically move assets based on market cycles. Whether for tax optimization, profit booking, or portfolio rebalancing, HNIs are making calculated decisions to maximize their wealth.
As the Indian economy navigates changing investment landscapes, such strategic shifts are likely to continue shaping Mumbai’s high-end real estate sector.
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