Before you start buying a house or having one built in hopes of financial gain, there are some factors to consider. It pays to be well informed.
Whether before or after a real estate acquisition, be sure to stay on the lookout and remain organized! Here is some information that is sure to be useful:
The Impact of Taxes
At the time of selling, you will have to pay taxes on the capital gain. For example, if you paid $200,000 to acquire the property and sell it 5 years later for $300,000, you will make $100,000. This gain is taxable at 50%, so $50,000 will be added to your income. This is a point to keep in mind so as not to be disappointed.
The Consequences of Living in Your Property
However, if you live in your rental property, for example, you will be able to deduct a portion of your expenses (electricity, snow removal, etc.) that corresponds to the percentage of the space you occupy in the building, which is financially interesting!
The Importance of Reporting All Income
A word of advice: do not fall into the trap of declaring expenses that are not truly related to the building or declaring earnings that are lower than reality. This could hinder you in the future. For example, if you want to buy another income property, it may be difficult to find a lender because your financial picture will not look as strong as it really is.
The Security of Having Enough Liquidity
When shopping for a property, do not forget to calculate absolutely all possible expenses to see if your budget allows you to make this purchase. Ideally, you should be able to deal with all types of unexpected expenses: urgent renovations, unoccupied housing, etc.
The Possibility of Remortgaging
To finance a new real estate purchase, some choose to remortgage the house or building they already own. This increases their purchasing power and adds leverage. However, this involves risks: you need to be sure that your budget will cover unexpected expenses.
Real estate is an environment where making quick investments is possible. If you are ready to acquire a property, contact a Via Capitale real estate broker!