Investing in real estate is more beneficial than in stocks. The benefits of owning a residential or commercial space are clear. Let's consider the reasons behind this statement.
Tax incentives
The size of the maximum tax deduction is much higher in the case of real estate than when making a profit from a brokerage account or IIA. In the Russian Federation, there is a certain procedure for refunding taxes when buying a living space. You can get up to 2 million rubles. If you take stocks, then when you replenish the IIS, it is possible to return no more than 52 thousand per year.
If you own real estate for more than five years, then you will not have to pay personal income tax when selling it. Therefore, the difference between the initial and final cost will be
entirely yours.
But the benefit is more significant on the example of the United States. First, you can get your mortgage interest back if it doesn't exceed a million dollars. Secondly, when selling the main living space, the tax deduction reaches 250 thousand dollars, if the landlord is not married. For spouses this amount will be doubled.
As for real estate in the commercial sector, Americans can benefit from the exchange rule 1031. This investment method allows the proceeds to be used again in the purchase of square meters. Plus, in America, tax write-offs are provided due to property depreciation and amortization.
Safety
Buying property is a less risky than owning shares.
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First, by purchasing real estate, you get a kind of insurance against inflation. There is no devaluation of the living space, because its value is constantly growing. The same applies to the size of the rent - it increases along with inflation.
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Secondly, investing using debt funds is safer in the case of buying real estate. The mortgage serves as a kind of leverage. The analogy on the stock exchange is margin trading. If not the most experienced trader starts it, there is a high risk of losing much more than the interest on the loan.
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Thirdly, an important point when investing is the psychological atmosphere. If your property can be touched with your hands, a sense of responsibility for it comes naturally. When your account contains virtual shares of companies outside your control, you can forget about the feeling of stability.
