Purchasing a freehold apartment in order to produce rental income is becoming increasingly attractive for investors, above all as a means to supplement retirement income. The expected appreciation of your property, together with regular rental income indexation increases makes this an investment to build up your equity.
Letting property is a business activity for the purposes of Value Added Tax, allowing you to deduct input VAT. Thus, the apartment may be acquired at the net purchase price. Interest on borrowings, depreciation for tax purposes (Afa) and other rental-related expenses are business expenses deductible from taxable rental or leasing income. Provided the transaction is structured appropriately, you can benefit from additional tax advantages in the initial years. Gains on disposal of the property after 10 years are â€“ as the law currently stands - not subject to income tax.
Finding the right property
If you are looking for retirement investment properties, we recommend buying newly constructed one or two-room apartments. For ease and sustainability of letting, the ideal size should be between 30 m2
and 55 m2
The location you select should have a good public transport network, access to main roads and good neighbourhood shopping. Interior fit out In addition to a practical layout, the investment property you choose should have a fully fitted kitchen, a well finished bathroom and parquet flooring.
The return on your investment will depend on the following factors:
- Purchase price
Location, size, floor plan and fit out of the apartment determine both the
purchase price and the rental value. Obviously, the relationship between
rent and purchase price determines your yield.
The mix of equity and debt should be in line with your investment goals.
- Determining the rent
The appropriate rent is determined by rental values of similar properties
on the market.
Services offered by Raiffeisen-Leasing
We can offer you a complete range of services, reducing your administrative burden to a minimum. Our services include:
Optimal fit out of investment properties for rental Support and coordination of legal and contractual requirements
Tax planning and optimisation
Initial letting and subsequent letting if desired Preparation of documentation for annual income tax returns.