Quality property can be sold over the years with interesting appreciation and regular rental income. Moreover, real estate investment is understandable to most people, as opposed to, for example, the purchase of foreign shares. Currently, however, real estate prices in the Czech Republic have risen faster in recent years than in most Western European countries, and unpredictable property purchases can not be reimbursed financially. "It certainly does not apply in practice that the purchase of real estate always earns. It depends primarily on the location of the property and its facilities, as well as on the parameters of the drawn mortgage, " explains Emil Broz (FinFocus).
There is no mortgage as a mortgage
The success of investing in other properties also greatly affects the parameters of the mortgage, which some people underestimate and focus only on the actual selection of real estate. It is definitely not appropriate to draw a mortgage in time pressure and deal with it at the first bank. Mortgage is a long-term commitment and even a minority of the contract can ultimately cost the total cost. "Before selecting the real estate, it is advisable to consult the intervention of the mortgage repayment in the family budget with a professional advisor and to specify the maximum price of the property in advance with regard to the borrower's monthly repayment due to the family lifestyle," adds Emil Brož.
Rental is not worry-free
Passive income is very tempting and rental income popular, but certainly not out of work. The landlord must take care of his property regularly. Most people choose rental housing for a temporary period of time, for example because of study, temporary change of work, divorce or at the beginning of a partnership relationship. Most landlords must therefore expect more tenants to change. Sometimes it may not be possible for the second tenant to move in immediately after the previous tenant, and the landlords should count with several months of rent outages. "Termination of a contractual relationship requires active search for new entrants, concluding a new contract, and fulfilling the necessary administration, for example in the case of energy, renting a property is not suitable for people who do not want to worry about their work, investment in securities is more advantageous" points out Emil Broz.
Pay attention to tax obligations
Buying property and renting it are linked to tax obligations. The buyer has to pay once the tax on the acquisition of immovable property. On 1 January of that year, property owners pay real estate tax every year. And rental income has to be included in the tax return because it is subject to income tax for individuals. Employees who receive rental income can not therefore ask their employer for annual tax collection and also have to file a tax return. However, the advantage of rental income is lower than that of dependent activity or self-employment because rent income under § 9 of the Income Tax Act does not apply to social insurance and health insurance and it is possible to claim 30% of the income from the income tax, flat rate.
Source: tz, edited editorially