The majority of people own one piece of property that is considered their primary residence. Most people live in their first house around five years, so why not have that property make some tax free money. There are several different ways in which you can be earning tax free money from investment property. In order for most that are involved with multiple real estate holdings they must equally take advantage of their federal tax laws that are in place.
Depending on what country you are investing in, each one will have a unique set of tax laws that are in place for investment properties, and dealing with the taxed or tax free money that may be earned. You should always check with your local authorities so that can adhere to what ever rules, regulations and laws are in force.
One way that a lot of people overlook as far as earning some tax free money is to use your primary house. When you own a single family dwelling and you sell, in most countries you will not have to pay any tax at all. The majority of people will spend three to five years in their first house because they move on to a bigger model. But what if, when you’re shopping for that first house, you look for one that perhaps needs a little TLC, of some minor cosmetic upgrades. If you can find one that you are still able to live in, you can do the upgrades as needed, and not have to have another dwelling to live in.
Real estate has proven over the years to average around three to seven percent yearly growth. So even when you do nothing to the property, you usually still see a profit from the purchase price. But the problem is that people tend to spend that newly found money that they made from the profits, on a bigger, more expensive property. If you could set out and purchase and upgrade three to five investment properties in the next three to five years, by the end of that time frame you could very easily have the last property paid off completely. When this root is taken you can have your property paid off all because you would have been earning tax free money from investment property.
Now what you can do is borrow against the value of your current property in order to purchase more investments properties. It’s commonly called re-mortgaging or re-financing your property. The lending institution will generally lend you up eighty or ninety percent of the actual value of your property. So if your home was appraised out at $200,000 and you were able to re-mortgage for 80%, then you would have access to $160,000.
Not only that, but in some countries you could spin that money off into another investment that would allow for more tax free money from one investment property. Make sure to check with your local, regional and federal authorities in the specific area of your investment. There are several ways to earn tax free money from investment properties so there is no reason for anyone to try and do it illegally.