What are the advantages of buying house rather than renting? Since buying a house is a more advantageous over the long run, I would choose to focus more on the advantages. Unless if your problem is monthly amortization and income requirement then renting is the best option until you are finally prepared for the commitment in buying property.
Here are the advantages being a housing buyers in the Philippines.
King of Your Real Estate Property
You are the master in your own property. You decide if you want it to be extended or improved. You decide when to put up the house fence to secure you property and your family, you choose your front yard landscape and you house paint is based on your preference. You have all the authority to change your floor tiles, kitchen sink and bathroom fixtures anytime you want without asking permission from anyone. These are the primary things you could do being an owner of the property.
Value Appreciation of your Property
Buying a house is cheaper in the long run as all properties appreciate and no matter how you bought it - in cash or financing, your money isn't lost because it is a tangible property investment that you may sell at anytime, usually at a higher price. A good project and location choice would give you maximum appreciation value.
An example for buying house under financing is: If a house was purchased at 10% Down Payment(DP) and after a year inflation increased by 5% or more, then your down payment or cash out would have had had appreciated by 50% or more. Say, a Php. 1 Million total price of house, of 10% DP is 100,000 and 5% appreciation of value brought by inflation is equal to 50,000 in a span of one year. That is the appreciation out of your 100,000 cash out.
Plus, if the property development you had availed with is fast selling that would make houses in the community appreciate more due to high demand of buyers. And another factor to maximize this value appreciation is the good property management in the community that would maintain all facilities and amenities and thereby sustaining the value appreciation over the long run.
For this matter, buyers should look into the overall potential of property. Consider not just the house choice but the long term potential of the community.
Tax Incentives in Buying Philippine Properties
I had a hard time looking for the information regarding tax incentives for "First Time Filipino Home Buyers" on the net. Usually you could find tax incentives regarding first time home buyers in other countries like USA. I later found out that there are really no tax incentives for first time buyers in our country. It's quite a bit disappointing as a first time home buyer myself.
At the end of the day thinking why there are no tax incentives we have for first time home buyers, I've come to realize the tax incentives we enjoy in all economic housing projects.
Maybe not a tax incentives for first time buyers at least we availed 12% tax(VAT) incentives at the time we availed of economic housing like Amaia Scapes Cavite project.
Here is an excerpt from BIR (Revenue Regulations No. 13-2012, dated October 12, 2012) The VAT treatment on the Sale of Adjacent Residential Lot, House and Lot and other Residential Dwellings.
"The Sale, transfer or disposal within a 12-month period of two or more adjacent residential lots, house and lots or other residential dwellings held primarily for sale to customers or for lease in the ordinary course of trade or business in favor of one buyer from the same seller, shall be presumed a single or one sale of real property, whether covered by one or separate deed/s of conveyance.The sale shall be subject to value-added tax (VAT) if the aggregate value of the adjacent properties sold exceeds P1,919,500.00 for residential lots and P3,199,200.00 for residential house and lots or residential dwelling."
"This however, does not include the sale of a parking lot which may or may not be included in the sale of condominium unit. The sale of parking lots in a condominium is a separate and distinct transaction and is not covered by the rules on threshold amount not being a residential lot, house and lot or a residential dwelling, thus should be subject to VAT regardless of the amount of its selling price."
The ruling favors property buyers for economic housing classifications. Like some of my clients in economic housing project, they availed duplex units and still able to be eligible in tax limit. I'm sure most property investors had took advantage of the opportunity, as 12% VAT of a price is equal to 120,000 in a million-priced property.
I am still hoping our country could give tax incentives for "First time home buyers", to attract more young professionals to invest in property thus create commitment for themselves that would also be good for the economy in the long run.
You have Pride of Ownership and Limitless Enjoyment
Is it strange feeling to live if you are renting in one place after another? You need to adjust on how your landlord does business with you, on how your neighbors see you and your restrictions as lessee. On the other hand, buying your own house will give you peace of mind for your family, get comfortable with neighbors and could enjoy the house because you have the mindset to stay for long . It also gives high respect from community as an owner and could give you and your family an interest to be part of community activities.
Selling Your Property anytime
Selling your house could give you profit as the property had appreciated its value and at anytime you want to dispose of it, you have all the rights to do so.
A friendly advise to all future buyers, at least save something enough for the Down Payment - a 10% or 20% of your desired property price before buying or making reservations. By experience and observation as a practitioner, most clients are making reservations because it is affordable to reserve and later realize that down payment is very expensive to pay. Reservations for property in the Philippines is generally half of the DP and also most clients are looking forward on affordable monthly amortization thus overlooked the 12 or 24 months down payment.
For us sellers, it's not the reservations but helping clients owning dream house. It's a happy selling for us if the client gets their dream house.
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