Property purchases, which in practice are often property speculation, may not be as good an investment as popularly perceived. Calculating what the risks are is not an easy thing, and the recent re-imposition of property gains tax will have an impact on investment practices. What seems decisive at the end of the day is timing.
HAVE WE BEEN MISSING OUT? This is often asked in relation to where we should park our money, after hearing stories about windfalls from property gains. The recent announcement about re-imposing property gains tax has been met with widespread apprehension, suggesting that quite a few people are in fact investing in properties.
“It’s not fair if I am taxed as I bought my property 20 years ago – I am not a speculator,” they say. The thing is, the statute of limitations for keeping documents is only seven years so it is unimaginable that there is a legal way to calculate property gains if one had purchase a property before that – so not to worry.
But is investing in property all that rewarding relative to risks and hidden costs? The strength of the property market has seldom been called to question. Then again, the very bad recession that the world is going through is unequivocally attributed to the bursting of the property price bubble. Structured investment vehicles embedded properties with other assets resulting in net worth crumbling all over that had to be bailed out by the government.
One has to ask if there is really a boom and bust phenomenon in the properties market.
