Are there advantages of buying property?

Yes, there are many. Besides acknowledging the pride of ownership, purchasing real estate could be the most viable financial investment decision of your life!

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If a property is well maintained and is within a high demand location, there is no telling how much equity that it can accumulate. Equity (worth) occurs either by paying down a mortgage over time, and/or receiving an appraisal (assessment) higher than originally paid. Owning property offers great tax treatments. With investments, there are three types of potential income sources; they include interest, dividend, or capital gain. Buying GICs (Guaranteed Investment Certificates), term deposits, or mutual funds, for example, could earn you interest at maturity, which is fully taxable. Dividends are profit returns generated from owning shares in a company; they offer a better tax break than interest.

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Capital appreciation (gains) occurs when someone sells their residential property (or fine art, etc.) for more than they bought it. This gain offers the best tax treatment. And if by chance, that same profitable real estate was a main principal residence (and not an investment unit), it would be fully tax-exempt. If it was deemed a rental property, however, it would only be taxed at 50%, still making it the most appealing investment vehicle with the greatest tax advantage. WOW! (This is truly an amazing example of What Often Wins!) Once you have built up sufficient equity, the possibilities could be endless. You could borrow against the property's worth, which is known as leveraging. Many people take advantage of this to do home renovations/ improvements, refinance or centralize debts and payments, buy a vehicle, computer, and yes, use it as a down payment to buy another property. Some people even use it to pay for their post secondary tuition. Alternatively, you can open up a Registered Education Savings Plan [RESP] for your child(ren) to help fund his/her/their studies. There is also the Life Long-learning Plan [LLP] for you (the parent), which allows you (the parent) to borrow money from your RRSP portfolio to go/continue/go back to College/ University. Sometimes, when people borrow equity from their property, they may choose to refinance instead of having a second or third mortgage. Also, a home equity secured line of credit is another option. Because it's backed by the home, a lender can offer a more competitive interest rate typically at (their) prime (a lower variable rate.) $UCCE$$FUL Vernal Banton is a duly noted life skills author and coach who trains youth, young adults and adult newcomers on various hot topics including demystifying consumer credit and finance, gainful employment, independent living, home buying, superior sales and service, and successful living. You can find out more about his profile and media appearances at VernalBanton.com or by contacting vernal@email.com.

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