Once you have a good amount of savings lying in your account, the best way to secure and grow that saving is to invest it. Everyone wants to make an investment that is secure and that promises best returns. Real estate is hands down the best option for making an investment. If invested wisely, it promises good returns.
After you have chosen the property you want to invest in, you need to decide how you want to purchase your property. If you are a real estate investor, you can choose from these two forms.
This means your property will have you name on the deed. If you are thinking of renting out your property, you will have to keep a complete track of your income from rents and file it for taxation.
This means if you own a company, the company or corporate name will go on the deed and any income generated will be added to company’s profit or loss statement. The company will also be liable to pay for the taxation as applied for the property.
Factors that decide which form of investment to make
If you are thinking of buying a property on personal basis, mortgage is the only option that is available. You may hire a real estate agent to track down a property of your choice and then ask a mortgage broker to negotiate the best suitable mortgage plan for you. Just in case you have started a new corporation, the lenders might be reluctant in lending you money as a new business is seen as a high risk by them.
Pre tax and after Tax dollars
If you own a company and have lots of extra bucks lying in your account waiting to be invested, you may want to buy a property under the corporate name. If, you make an investment under the name of your company, you will be using pre-tax dollars and that will save you huge cash.
In case you decide to make a personal investment from the cash lying in the account, you will have to withdraw the money in form of dividends or salary. This will apply a tax on the total amount and will leave you with lots of cash going in taxation.
Personal residence exemption
There is a lot of difference in the taxing pattern depending on the way it is declared. It the property is bought for rental purpose, it will bear great tax on the gains incurred over the years at the time of resale. A vacation house or a second house will however be the best choice if buying a home under personal investment.