The investment in real estate is considered to be a crisis-proof investment in property values and protection against inflation. In addition, tax savings can be made with investment property. In the case of later retirement provision, attractive rental income contributes to an increase in income. But anyone who invests in a property is tied up for a long period of time. Before buying, therefore, the advantages and disadvantages should be carefully weighed. We can look back on many years of experience in the real estate sector and have therefore compiled the most important aspects for you to make the decision easier for you.
advantages of investment property –
An investment property is a safe investment
On behalf of the Federal Ministry of the Interior, the Federal Statistical Office has determined that the German population will decline by 15 to 21 percent within 50 years. However, due to the high demand for single dwellings, it is not to be expected that the population decline will also lead to a decrease in households. The demand for single-apartments is growing, especially in conurbations, as one-person households are becoming more and more popular.
Investment investment Real estate in good locations therefore means a solid value investment in the long term. It is important to be able to rent it and to keep it in constant demand.
Investors can save on real estate taxes
Cleverly used advantages can save on taxes and contribute to the building up of assets. Depending on the investment chosen, capital investors can save a lot of tax. Those who decide to invest in a memorial property can write off the entire modernization costs over a period of 12 years. A linear depreciation rate of 2 percent applies to newly built and existing buildings. You can not save your taxes with your own home ownership. Costs associated with the rented property can also help reduce the tax burden. If the loan is borrowed, the owner can deduct the interest from the tax and thus save taxes.
Investment property means lucrative returns
Investors can expect a high return on long-term investment in real estate. A low interest rate, in particular, contributes to a high return on externally financed properties. Prerequisite is a good rentability of the property. Compared to stocks or funds, the real estate investment offers lower returns at first sight. In terms of security and value, however, the property is clearly ahead of the competition with a much more risky equity investment.
A real estate investment is long term
Short-term fluctuations in value are irrelevant in the case of investment properties, since the investment in a property is always to be seen in the long term. Anyone who decides to buy a property is thus bound for a long period of time – from the start it is clear that the object can not be sold at short notice. Value fluctuations, which arise between the real estate market, are therefore meaningless for the buyer.
An increase in the value of the property can be expected in the long term
The population in conurbations is increasing and the demand for housing is also increasing. Viewed in the long term, real estate investment is expected to grow significantly, especially in metropolitan regions.
Real Estate Offers Inflation Security
The investment in property values provides an ideal protection against inflation. Real estate is regarded as a safe and low-risk investment that defies the devaluation. As a rule, inflation also drives rents up, so the owner can expect stable income.
Subsequent use of the property possible
Even if the investment object was initially acquired for leasing, subsequent self-utilization is possible. Anyone who needs less living space or wants to live close to the center can move into their own property and thus profit from the rent-free housing during the rental period.
Compensation of investment property –
Finding the right property is not always easy
Decisive is the choice of the right property, because not with every object can also lucrative yields achieve. The search for the right property is time-intensive and should be done together with a professional.
Taxes on premature real estate sales
If you want to buy a rented property and save money, you should note that the property has to be owned for at least 10 years before it can be sold without tax. If the property is sold again within the 10-year period, the sale profit must be taxed.
Real estate investment is a long term investment
Real estate investments are long-term investments and capital invested is immovable in the property. Investors should be sure before buying that they own the property for a long period of time, because that is the only way to make a meaningful investment. Short-term sales can lead to tax disadvantages and thus damage the investor’s assets.
Modernization and repairs for investment property
As the owner of a property, investors are obliged to keep the property in good condition. If modernization or repair measures are concerned, they must be implemented by the owner. It is recommended to set up reserves to finance subsequent maintenance work.
Save and create taxes
In order for the property to contribute to the construction of the asset, it is advisable to save the amounts resulting from the tax benefits in a separate account. In this way, capital investment, through the aspect of tax savings, contributes to an increase in assets over the long term.
Elaborate management of investment property
The owner of a leased property must expect an administrative burden on his property. Billing and communication with the tenant requires some time. If the apartment has to be rented after an extension, this also requires the use of the landlord. If you do not wish to take over the management of your property yourself, you can order a housing administration.
Real estate investment is a long term investment
In the long run, investment property is an optimal investment. Besides the tax depreciation possibilities in the first years, the property serves later as retirement provisions and improves the rent income of the owner. We support you in the selection of suitable investment properties and show you ways to save on tax. Benefit from our many years of experience and our expert network of experts. The search for the suitable object can be very time-consuming, possible fall cords are often difficult for the lay person to recognize.