depreciation | wealthymatters

Income Tax And The Depreciation Of Motor-Vehicles

September 24, 2013 6 Comments

wealthymatters If you are carrying on a business or profession one of the major instruments of reducing taxes is to claim depreciation on the purchase of your vehicle.

Any expenditure incurred for the purpose of the business is allowed as a deduction from your business profits; as such, expenditure incurred on a vehicle used in the business viz fuel expenses, repairs & maintenance expenditure, vehicle insurance are allowed as deductions. Besides, in computing income from business one of the most important items of allowances is the allowance for depreciation, provided by Section 32 of the Income Tax Act.

Depreciation is a non-cash expense which results from the reduction/diminution in the value of certain capital assets including vehicles etc. This deduction towards depreciation is very essential to arrive at the Income from Business/profession of the taxpayer and also to amortize the capital cost of the amount invested in business assets like factory building, machinery, plant, furniture, vehicles etc. The purpose of allowing depreciation is to provide in the course of time for replacement of the asset which is allowed to be depreciated over a period of time. Read more of this post

Filed under Alternative Assets, Entrepreneurship, Tool Kit Tagged with depreciation, depreciation of vehicles, income tax, postaday, presumptive taxation scheme u/s 44AD of the Income Tax Act, saving tax, Section 32 of the Income Tax Act, Written Down Value

Tracking Your Assets

July 10, 2013 Leave a comment

wealthymatters

As your wealth increases,one thing that’s bound to increase is the number of your material possessions.And keeping track of them and managing your assets and toys is a major issue. Small wonder then that the seriously wealthy have family offices,run like small companies, to manage their personal wealth.There are trusts with administrators to manage endowments.There are professionals and companies to manage car,yacht,art collections etc.Moreover if your money comes from businesses you are bound to sooner or later require systems and software and perhaps dedicated staff to manage your fixed assets and inventory.

Even for those of us who are not yet billionaires,maintaining an inventory of our household assets and valuable artifacts and collections,in a safe place, is a good idea.The effort of cataloging everything we own is time consuming and something of a pain in the neck but essential to purchase adequate home owner’s insurance.Also in case of claims,having detailed lists of your possessions,their depreciated value and proof of actually possessing them at the time of claim,betters your chance of getting the insurer to payout a decent sum.Items like jewellery,art and antiques etc. need to be covered for full value via specialized policies or riders so that in case of theft or natural disasters or man-made disasters you can recover their full value.Also up to date inventory lists come in handy while estate planning and drafting your will. Read more of this post

Filed under Tool Kit Tagged with app for smart phone, app store, art collection, art insurance, asset list, asset management, asset management app, asset management software, Asset Panda, c-net, car collection, depreciation, estate planning, family offoce, fixed asset management software, home owners insurance, insure jewellery, postaday, tracking your assets, trusts, yacht collection

Some Real Estate Facts To Mull Over

August 21, 2012 11 Comments

wealthymatters.com (1)Long term returns from residential real estate

Robert Shiller, by tracking the US home prices data from 1890 concluded that in the longer run, property prices grew at an annualised return of around 3%, just keeping pace with inflation.Housing price rises could not outstrip inflation in the long term because, except for land restricted sites, house prices would tend toward building costs plus normal economic profit.

I have no such data for India.But here is what I can attest to:an ancestral house acquired 120 years ago for 6000 Rupees is now valued at 1.2 crores-an annualized return of about 6%.I think this is close to the long term inflation rate in India.

(2)Is home ownership all that it is touted to be?

In a poorer country like Bangladesh, 90% of the houses are owner occupied. Whereas in a richer country like Switzerland, only 33% of the houses are owner occupied.

Europeans are more comfortable with renting compared to Anglo Saxons and we Indians need to decide whose model we choose to follow.Read what Niall Ferguson has to say about property ownership. Read more of this post

Filed under Theory, Tool Kit Tagged with ancestral house, capital appreciation, Case-Shiller index, depreciation, EMI to income ratio, fluctuations in income, illiquid, inflation rate, keeping pace with inflation, liquidity, long term contracts, Long term returns from residential real estate, monopoly, mortgage insurance, Mortgages, Niall Ferguson, postaday, property ownership, property-owning democracy, real estate investing, rent rate, rent ratio, Robert Shiller, volatility

Please Help Me Understand Gold

March 12, 2011 7 Comments

I graduated in 2000.In the same year I made my first purchase of gold.Since then I’ve been watching the price of gold.The first thing to attract my attention was the relentless upward movement in the price show in the graph below:

Logic suggested that what goes up in price must come down.So I tried looking for the historic prices of gold to try to see if there was a cycle . Read more of this post