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13 April 2024
While for many younger people and families the question "Rent or Buy" Homeowners are often faced with the question of what to do with the property when their personal situation changes and their own use is no longer the main focus: rent it out or sell it? The reason for this could be a change of residence, the children are moving out or a more suitable property has been found.
From a financial perspective, renting out a single property is rarely worthwhile: the returns are modest, the administrative costs are relatively high and, depending on the location, the vacancy rate can lead to fluctuations. It is also often forgotten that renovations and ultimately a new build entail high investments. Although an investment property can be used as a loan, there is a strong connection to the property and the location. Nevertheless, there may be reasons to keep the property, optimise the yield and plan a sale or development in a targeted manner. Income taxes and access to capital play a decisive role here. These, in turn, change continuously with the life situation.
A sale brings the financial situation to the fore and requires clarification of the GGSt in advance. After the successful sale of the house, the financial plan must be able to implement the target return. Optimizing the sale with a development is one option, because the land is the actual valuable part. Processing in stages requires in-depth tax clarification.
Rent or sell, who can advise?
If you are unsure, it is worth answering the following questions. They are the same ones that are used in a consultation:
| Ask | Why is that important? |
| formulation of the client's request | If the situation of a homeowner changes, it is important to know the client's intrinsic motivation, expressed in their own words. Questions to ask: What has changed? What doesn't fit (anymore)? What is the impetus for the change? What should or must be achieved? Are the goals personal, for the family, children? |
| General situation | |
| Are there personal reasons why you want to keep the property? Emotional attachment, children, future use, regional roots, etc.? | Financial and tax planning ultimately shows what is worthwhile. However, the general conditions and personal goals should always have priority. |
| Are there personal reasons why you want to part with the property? | Financial and tax planning ultimately shows what is worthwhile. However, the general conditions and personal goals should always have priority. |
| Financial goals: are there specific goals or wishes that require greater capital? | All variants can be designed to provide a steady income, but also to generate liquidity. |
| Present Situation | We take the current financial situation from the tax return. |
| Future situation and plans for the next 10-20 years, retirement and pensions. Are rental income, for example, included in pension income? | Additional information on financial situation, plans and claims is particularly important with regard to the financing and affordability of the options. |
| Future living situation: renting, in a new home (replacement property)? What rent or costs are expected for the replacement property? | The new living situation is relevant for GGSt, income tax and affordability. |
| information about the property | |
| Purchase price | The following information can be used to estimate the tax consequences (GGSt) of the sale. |
| When was the property purchased? | |
| When was the property built? | |
| When was the property last renovated? | |
| How much was invested in the renovation? | |
| Exact address of the property, type, number of rooms, living space, plot area (approximate), condition (new, well maintained, in need of renovation)? | With modern tools, the market value of a property can be quickly and roughly determined with just a few details. |
| questions about the procedure | |
| In what time frame should any transaction take place? | See also personal situation. For example, someone who is moving away wants to get rid of a property quickly. |
| What form of support is needed? | Are there already arrangements for rental management, sales agents, and financial advisors? A complex transaction requires overall planning, but specialists should be commissioned to deal with detailed issues. |
The Simpletax We advise you comprehensively on tax matters and bring in specialists for real estate, mortgages, administration, pensions and investments in order to clarify possible implementations at an early stage and to show you options.
Do not hesitate to contact us for a non-binding offer for the consultation to contact.
Theme
real estate, tax consulting, tax planning
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