The financial question: Suspension of redemption is risky

The financial question: Suspension of redemption is risky

The financing of rented properties used to be simple. Who needed a loan, orderly deserved and was well advised, took a fixed-rate loan and put the repayment in an endowment policy. This is no longer worth it.

The financing of rented properties used to be simple. Who rented for the construction or purchase of properties needed a loan, orderly deserved and was well advised, took a fixed-rate loan and put the repayment in an endowment policy.

The advantage of this model was the difference in interest rates after tax. If a loan, for example, cost 5 percent a year, the tax office took over at a tax rate of 50 percent, half of the interest rates, so the cost after taxes fell to 2.5 percent. Because endowment insurance cast off for a contract until the end of 2004 after taxes every year 3 to 4 percent, the difference brought investors high profits.

Beat the treasury with the help of unit-linked policies cheat

That is all over for two years. Classic endowment policies no longer play a role in the financing of the rented property. Instead, investors trying to beat the tax authorities with the help of unit-linked policies cheat. This is evident in the following example.

An investor is 40 years old and wants to buy a property that will cost 250,000 euros. He has saved up 50,000 euros, so he must accept 200,000 euros as a mortgage. The investor taxed an annual income of 120,000 euros, so that the monthly payments needed to pay off the debt in the next 20 years, are easily portable.

Now the question arises of the optimal financing. At the range of devices, not much has changed: The investor sets the capital full one, closes the gap with the help of a loan and pay the debt back to the bank. It can also accommodate celebration loans and repay the loan with an annuity. The third option, which for months is popular with top earners increasingly popular, the fixed-rate loan and fund insurance. The fourth way is hard loans and mutual funds.

The investments, which are used for loan repayment, are nothing new, but old savings plans. The individual contracts trigger different taxes. The interest on the endowment insurance is taxed half at maturity. This also applies to unit-linked policies. Here half the difference between the payments and the flow performance of the control is subjected. In mutual funds, the withholding tax will in future be applied, must be considered so that, as the models to calculate the bottom line.

Different approaches

The first solution, the direct repayment of 200,000 euros currently costs 5 percent annually for ten years fixed interest rate. If the nominal rate in the second-half rise to 6 percent, the initial eradication to 3 percent must be set to pay off the debt at runtime. This results in 240 installments of 1,343 euros. The annual percentage rate of this payment number is 5.33 percent before taxes. After taxes, the costs drop to 2.99 percent per year because the interest on the debt is tax deductible as business expenses and the investor taxed annually 120,000 euros for the basic table.

When fixed-rate loan, the principle is different. Here, the investor receives 200,000 euros and writes the interest rate of 5 percent to ten years thereafter. After which 6 percent. In both sections, only interest is paid. First, be 833 euros per month and get in the prolongation to 1,000 euros. The remaining debt after 20 years is 200,000 euros. It is to be repaid by means of an endowment insurance in one fell swoop. For this 240 premium, each 548 euros are necessary for an investment interest rate of 4 percent per year.

Since early 2005, the rule is that income from endowment insurance, which is paid after the 60th birthday, be taxed in half. The interest is taxed once at the end of the term. This looks at first glance like an advantage of, but investors should not be too high evaluate the benefit. The hope that taxation takes only at the age when the tax rates should be much lower than today, be treated with caution.