Are you one of those buying or selling their property quickly? In times of low-interest rates, real estate can be extremely lucrative as an investment. They are stable in value and give hope for a decent return. On the other hand, the “buy and sell a property” strategy comes with some risks and issues. If you want to be in the real estate business, this is among the few facts to take note of.
Is it worth buying and selling an apartment or house?
The European Central Bank (ECB) has kept key interest rates at zero percent for years. This low-interest rate creates favorable conditions for buying and selling real estate. The disadvantage, however, is that more and more investors want to invest in so-called “concrete gold” because other forms of investment hardly promise a profitable profit. Accordingly increases especially in the metropolitan areas, the demand for real estate, and the real estate prices. Before you invest and buy a home or buy and sell a condominium, there are a few questions that need to be answered :
Is the property in a good location?
Are there a balanced relationship between risk and return?
Can planned rental income be achieved?
Does the property come from private ownership or business assets?
What are the costs (taxes, financing costs, etc.)?
Is the business model worthwhile: Buying property and selling it again?
Private investors who invest in the purchase and sale of real estate may be subject to taxation under certain circumstances. Anyone who buys, builds, or extensively modernizes more than three properties within five years is considered a commercial property seller from a tax perspective. The tax office uses this so-called ” three-property limit ” to categorize it for tax purposes. However, a tax is not always due on properties that are bought and sold. Tax-free is:
Properties that have been owned for more than ten years
Properties that have been used for at least five years
Properties that have been inherited
What are the costs of buying and reselling real estate?
If you want to buy and sell a property for commercial reasons, you should first get an overview of the costs incurred. They can be different depending on the property.
Buy land, build a house and sell
If you want to build a house for resale, you should calculate the costs of land and house construction precisely. Since not all construction costs can be planned when building a house, this real estate investment is associated with a certain risk.
Buy, renovate and sell real estate.
Before you buy a property in need of renovation in order to sell it on, it is advisable to have the building fabric checked by a professional. Moisture damage, bathroom refurbishments, or new windows quickly drive up renovation costs.
Read also: Overview of Financing a Business
Sell real estate after a short time
If you want to buy and sell a property within a few years, you may have to pay the speculation tax. It does not apply if the owner, his or her spouse or partner, or their own children have used the property themselves.
The question of whether it is worth buying and selling a property cannot be answered with a general yes or no. Consider buying property carefully and do not make a hasty purchase decision.