Are Bollywood deals attractive?

When it comes to property buying and selling, the annual income is what matters.
Net profit is calculated only after deducting stamp duty, brokerage, and various taxes.
Many Bollywood celebrities are also quite active in the real estate sector. A significant portion of their income is invested in real estate, particularly in Mumbai, the financial capital of the country, where they purchase properties to expand their portfolios. Recently, there has been a discussion on social media regarding how successful their decisions are and whether they are achieving the returns they expect. It was estimated that in property deals, the combined costs of stamp duty, brokerage, and various taxes reduce their profits by around 7-10%.

Recently, Gauri Khan, wife of Shah Rukh Khan, sold a flat in Dadar West for Rs 11.61 crores to renovate their residence, Mannat. She had purchased this property for Rs 8.5 crores about a year and a half ago. This resulted in a 37% profit, as per reports. Similarly, actor Akshay Kumar sold two flats in Oberoi Sky City in Borivali for Rs 6.60 crores, resulting in a 90% return over a holding period of eight years. Actress Sonakshi Sinha also sold a flat in 81 Aureate in Bandra, which she had purchased in 2020, for Rs 22.5 crores, earning a 61% profit.

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However, experts point out that these are not entirely profits. After deducting stamp duty, brokerage fees, and various taxes, the net returns are much lower. The expert further explained that Gauri Khan’s 37% profit in a year and a half translates to an annual return of approximately 21.1%.

Sonakshi Sinha’s 61% profit over five years, when converted into an annual return, amounts to only 10.1%, it was clarified. Similarly, Akshay Kumar’s 90% profit, when calculated on an annual basis, comes down to 8.4%. Experts suggest that returns should be calculated annually only after deducting stamp duty, brokerage fees, and various taxes. They also mentioned that capital gains tax should be taken into account as well.

For example, if Gauri Khan had sold the property within 24 months of purchasing it, she would have had to pay short-term capital gains tax.