Rs 1 crore apartment becoming Rs 1.8 crore while selling is an illusion?: CA explains the hidden math of real estate profits

A property doubling in value often looks like the perfect investment story. Buy a home for Rs 1 crore, sell it years later for Rs 1.8 crore, and the numbers seem to suggest an easy Rs 80 lakh gain. But according to CA Nitin Kaushik, the calculation is not as simple as it appears. He believes many people overlook the hidden expenses, taxes, and costs that quietly reduce real estate returns before the money reaches their bank account.

Taking to X, CA Nitin Kaushik described the popular belief around property appreciation as a "math illusion". He said people often celebrate an apartment bought for Rs 1 crore and sold for Rs 1.8 crore without considering the expenses that reduce the actual profit.

Costs ignored

According to him, several costs are ignored when calculating real estate gains. These include stamp duty paid at the time of purchase, brokerage charges that can range between 1% and 2%, and long-term capital gains tax. Kaushik highlighted that depending on the situation, these costs can significantly reduce the amount an investor finally takes home.



He explained that tax, along with other expenses, can take away a substantial portion of the apparent Rs 80 lakh profit. The final amount depends on factors such as the holding period, location, and applicable costs. Kaushik also pointed towards another major factor that many property owners overlook: home loan interest. With housing loan rates around 8.5% to 9.25%, he said the real returns can look very different after factoring in the total cost of borrowing.


According to him, once all expenses are honestly calculated, the returns from an apartment may sometimes only match a basic bank fixed deposit or could even fall behind depending on the situation. The CA further explained that while property prices may rise in many Indian cities, the physical structure of a building does not remain the same forever. The building itself ages over time, and regular maintenance charges become an ongoing expense that can affect long-term returns.


Kaushik clarified that this does not mean property prices cannot appreciate. Instead, he said investors should separate the value of the land from the value of the structure built on it. "The real story is how much of your profit was already spent before it hit your account," he wrote, highlighting that the headline selling price is not always the actual wealth created.

For people looking for long-term wealth creation, Kaushik suggested considering land as a different asset class. He explained that land is limited, does not physically age like a building, and usually has fewer holding costs apart from expenses such as annual property tax. However, he also acknowledged that land comes with its own challenges. It does not provide rental income, and buyers must carefully manage risks related to ownership documents and encroachment.


According to Kaushik, land and apartments should not be viewed as the same investment because a depreciating structure and the underlying land behave differently over time.