Two components of Real Estate Investment
You can gain two types of profits, "Selling profit" and "Investment profit," Selling profit is the profit from selling the property when it has a higher price. Investment profit is the profit from renting your property.
Merit of Real Estate Investment
⑴ You can secure the private pension
The insurance fee for the public pension is likely going to be increased in the future, but your allowance also might get decreased.
The pension age has also increased lately.
The real estate investment has the potential to make a constant and stable profit.
⑵ Perform well in inflation
The currency value will be dropped in inflation, Therefor the real asset such as real estate investment can be advantageous.
Generally, when the land price is increased, the cost of living also increases.
That means currency value is decreasing against the land price.
This is why real estate investment is profitable.
⑶ Stable passive income
The best thing about real estate investment is that you can make a stable income as rent for the long term.
It will not make a huge amount of money instantly, but enough to pay back the loan.
The price of interest, stock, land price has changed badly, but the rent of the apartment has barely changed.
⑷ Inheritance tax, gift tax avoidance
The tax from the inheritance, gifts are a huge burden. Especially the cash and securities will have tax depend on the market price. In the case of real estate, the inheritance tax and gift tax are calculated from fixed assets and land price, and it has the tendency to be lower than tax from cash and securities.
⑸ Instead of life insurance
⑹ For income tax avoidance
The income from renting your property can be declared as real estate income besides your salary income. If your total income of the real estate management is in red, your other income in black can cover it. Consequently, your total income will be lower. Therefore you can save tax payments. Your resident tax is based on your income tax, which means if you save income tax, you can save resident tax as well.