Property Investment: best way in which you can save for your retirement

admin | May 3, 2015

The property market has always been seen as an excellent way of saving for retirement. Houses are solid, long lasting structures which usually appreciate in value. Investing in property will provide either a nice one-off lump sum or can provide a regular monthly income. When it comes to getting started in property investment there are several options available, and it is always advisable to discuss your decision thoroughly with a financial advisor.

Releasing equity

This is a very popular method of funding an investment property. Providing you have a good level of equity in your current home you should be able to release some of this to fund the purchase of an investment home. If you are at or approaching retirement age, it is possible to simply unlock the equity in your home by approaching one of the many companies which specialise in equity release.

Property Investment and US Interest Rates in the Coming Year

Earlier this month, investors around the world with and without interests in the US were paying close attention to the country’s non-farm payroll report.

These companies will give you an agreed amount of funds and there will be no monthly payment due. Instead the amount of the loan, plus interest will be due from the proceeds of your estate after your death. This method of funding your investment property ensures you can continue to afford to live comfortably.

Flexible loans

Should you wish to invest in property before retirement age then there are many financial providers on the market who will be able to offer a flexible finance package. These will usually be secured on your current home so you will need to have a good level of equity already. Property investment can be an excellent source of financial security and owning one whilst still working can provide tax advantages. A qualified tax advisor will be able to advise you regarding your individual circumstances.

Benefits of property investment

There are many reasons why investing in property can be a good way to prepare for retirement:

It is an asset which you can see and it is unlikely to be moved. Long term it generally appreciates in value, and it should also be possible to sell it to release funds if times become difficult.
An investment property can be rented to other people and the rental income can be a useful addition to your finances in retirement.
There is a huge variety of tax deductions possible in respect of the various expenses incurred when purchasing an investment property. Advertising, council fees, land tax and mortgage interest are all examples of the deductions possible.
Depreciation and associated wear and tear costs can also be claimed on your tax return, reducing your annual bill.
The market value of your property can be increased by renovating or adding to the property. This will result in a bigger pot of cash should you choose to sell the property or may even allow you to release additional funds to build an investment portfolio.
It is often the case that initially you will be in a situation of negative gearing. This is where your expenses are higher than your income in relation to your property. This effectively puts your investment in a loss scenario and the amount of this loss can be offset against your tax return.

Self Managed Super Funds (SMSF)

It is possible to use one of these schemes – where multiple people have invested in a fund which is controlled by a trustee. There are strict criteria for borrowing to invest in property and it is essential to know all the facts prior to undertaking this responsibility. It can be a very effective way to invest in property and provide a retirement income but is a complex area of financial planning.

Caution

As with any investment it is vital to understand the risks and potential benefits. Anyone considering these options should discuss their current financial situation with a financial planner. This will ensure you have a balanced, soli strategy for your retirement plans. If you want to invest in property in Turkey, then you may require the services of an international planner familiar with foreign laws in the real estate business. All your choices should be made with extreme cautious; get to know the market and never sign papers without a realtor or financial advisor present.

Tags: Mortgage loan, Property Investment, tax deduction