Putting a house bought a few years ago up for rent, keeping a buy-to-let investment, or even renting an inherited apartment may seem like a logical choice in asset preservation strategy. However, it is often more profitable to sell your property in order to reinvest your capital into another property to get a higher return. Many reasons could motivate you to sell your property. We have analysed three:
Selling your property when changing your primary residence often allows you to unlock significant capital, making possible the financing of a better, larger home. Should your financial capacities be sufficient to be able to buy without selling your current home, you could consider renting it out to keep a property asset.
However, considering selling instead of renting, and using the capital to invest in another property would strategically be a better decision for two reasons:
(…) it is generally more profitable to sell your property and reinvest the capital in another as it improves your return on investment, since return is heavily impacted by taxation.
On a purely financial point of view, omitting any sentimental consideration, it is generally more profitable to sell your property and reinvest the capital in another as it improves your return on investment, since return is heavily impacted by taxation.
Even with an investor’s long term perspective, arbitrating your investments can allow you to improve your net return.
Four elements can motivate your decision to sell:
An inheritor often finds himself owning or co-owning one or several properties from his parents.
If the inherited property was the last primary residence of the parents, there is an additional 75,000€ lump-sum deduction on the applicable capital gain tax. Thanks to the revaluation factors and the accumulation of the 50,000€ ordinary lump-sum deduction (100,000€ for jointly tax payers) plus the 75,000€ inheritance lump-sum deduction, very low or no tax at all will have to be paid.
All the benefits described above concerning investors also apply to inheritors that have acquired properties through inheritance.
Lastly, whatever the scenario, selling a property allows you to reassess your investment in order to orientate your capital towards property with better yield or resale prospects. We advise to buy 1 or 2 bedroom apartments.
Lastly, whatever the scenario, selling a property allows you to reassess your investment in order to orientate your capital towards property with better yield or resale prospects.
Real estate advisors with the support of financial experts, can help you analyse your specific situation and evaluate the advantages of a sale scenario. The different fiscal, financial and real estate components of your project would be considered to guide you in your choice.
Which is great news, as a smart investment always starts with an informed decision!
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