3 minutes
Editorial Invest in Slovakia
The COVID-19 pandemic is raging outside and you are probably in the lucky part of the population that hasn't lost income. In times of crisis like these, they tend to the scissors of wealth and poverty are more open than ever, What means that people with income are able to live in much more luxury than people who have lost their income. A if you don't need to surround yourself with luxury, we recommend you invest! There are many investment products on the market today opportunities to choose from.
And that is why We are decided to create a miniseries of articles on rational arguments why it pays to invest in real estate. In today's article we will go through the first 3 reasons to invest in real estate. You will read about the remaining 7 reasons coming soon in other articles in this series.
Investing in real estate is one way to earn passive incomesaving for retirement, as well as how to build a diversified investment portfolio. Real estate investing can be done in a number of ways, either by buying a property and its subsequent rental, by buying a REIT, i.e. an index that holds real estate stocks, and last but not least, real estate investing can also take place by way of the reality of crowdfundingwhere the investor participates in either the construction or financing of specific buildings and properties, on pre-agreed terms. Let's take a look together at the various benefits of investing in real estate.
The main reason for investing in real estate for many people is generating passive income. However, in order to avoid the investment becoming unnecessarily risky, you must taking care to choose the right property. This should increase the cash flow in your family budget even if you have invested other people's money in the property, for example through a mortgage loan from a bank. Therefore, the alpha and omega Thorough research of the market and the location in which you are going to invest. Are there plans to build major roads or factories there? What does the current zoning plan look like? What are the amenities in the area, what is the composition of the population or companies operating in the office building? All this and more should be studied before you venture into real estate investing in an effort to generate passive income.
Whether you invest in a variety of financial market instruments, or you hold your investments only in real estate, you need to think about Diversification. Diversification of the investment portfolio is the strongest instrument for regulating the total the risk of investments. Even in our youth we are taught the saying not to give all our eggs in one basket, and it is no different when it comes to investing.
If you invest in stocks, bonds, commodities, cryptocurrencies or other financial instruments and you don't want to hassle with finding tenants and taking care of physical apartments or houses, look for diversification by investing in real estate crowdfunding, or by buying real estate indices REITs.
If you invest only within the real estate market, diversify your risk purchasing different types of buildings (residential, office, warehouse, manufacturing, etc.) and also buying real estate in different locations (capital city, smaller towns, mountains, etc.).
Unfortunately, the Slovakia subject to rental income of immovable property is subject to taxation, if of course the property is rented out properly for on the basis of a concluded lease agreement. Exempt from income tax is any taxpayer only up to EUR 500 for the entire tax period. However, as regards tax on the gain on the sale of the property, this is set up quite favourably.
Income from the sale of any property under a contract of sale is taxable in Slovakia, as it is considered to be income from transfer of ownership of real estate. However, in the law there are exceptionswhich liberate the gain on the sale of the property from tax. The most widespread way to to avoid paying tax on gains from the transfer of ownership of real estate is the expiry of 5 years from the date of its acquisition. In practice, this means that if you buy an investment property today that in 5 years you sell it for a profit of, say, 30,000, you pay no tax to the state.
And so, with tax relief, we end today's first article in the series 10 reasons to invest in real estate. Don't forget to read us next time for more reasons why it pays to invest in the real estate sector.
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