If you already own your own property and are thinking about making more money, a good tip is to buy a second property to rent. Purchasing real estate is never about throwing money away – unlike other goods that people tend to buy unnecessarily, implying only expenses.
A property will always be an asset and, even if it does not offer immediate liquidity, it is always an asset that can be valued.
Here’s how to acquire a second property to increase income!
Planning is the basis of everything
Don’t make decisions without first planning. Buying a property is not the same as buying a shirt or a shoe. Talk to your family, exchange ideas, prepare in advance.
Without savings, you will never be able to buy your second property. It is necessary to save and consciously invest your money. The most common way to buy real estate is through financing. But, to finance, you need to make an entry and commit to the payment of installments for a specific period.
If planning is essential to assume these costs, giving up superfluous expenses and saving.
Understanding what the FGTS is
The Guarantee Fund for Length of Service is the right of every worker with a formal contract. The boss deposits an amount every month in a Caixa Econômica Federal account, but the employee will only be able to withdraw the amount under certain conditions.
As it is a reserve money, which aims to protect the employee’s future, the FGTS cannot be used to purchase any asset. See below how the FGTS works in the acquisition of real estate.
How to use FGTS when buying a second property
If the person already has a property in a certain city, they can use the FGTS to buy a second property in another city or metropolitan region. You must also live or work in the region where you intend to acquire this second property.
Another rule is that the person cannot have any active financing in the SFH (Housing Finance System), which is Caixa’s most popular type of real estate financing, being the only one that allows the use of FGTS.
If you already have a property in your name in the same city, you can only buy another one if you sell the first one. Another restriction is whether the current owner of the property you want to buy also used the FGTS to purchase the property. If this happened 3 years ago or less, you will not be able to use your FGTS to buy the property.
Bearing in mind that the use of FGTS is only allowed for residences – construction, renovation, purchase of land or commercial properties will not be possible.
Benefits of buying a second property to increase income
Many people do not know, but buying a second property has its advantages: there are some tax benefits. If you spend at least 14 days a year in the new home, you will be able to deduct the interest on a mortgage from your tax.
To enjoy this benefit, however, the property has to be your home and not a form of investment. If you rent it for more than 14 days a year, it is considered an investment.
With a second property, you can earn income in different ways:
- Rent a house in the city;
- Rent while you are not retiring (after you retire, you sell your current address and move into your new home);
- Rent a beach house;
- Rent a country house;
- Rent for commercial points, clinics, offices.
So, did you like this content about property acquisition to increase income? Also take the time to read our post where we tell you how to get financing for your beach house.