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Property investment is often different from other investment in one crucial respect – people tend to be prepared to borrow in order to finance the investment. This brings additional risk, as a fall in property values can result in losses being magnified, and sometimes in the debt ending up larger than the property value.
This effect is called gearing, and acts to magnify both gains and losses. For examples see gearing.
Residential property
If you own your own home, remember that you already have a considerable investment in the property market. Any gain that you make when you sell a property that is your main residence will normally be free of Capital Gains Tax, so from an investment perspective this is very tax efficient.
Remember, though, that your main residence is your home and you are unlikely to benefit from any gain that you have made until you trade down to a cheaper property. This is proving to be an option that many retired people are now considering, in order to release capital to help them lead a more comfortable lifestyle.
Contact us for more information and impartial advice
Remember that property prices fall as well as rise and there is no guarantee that you will profit from property investment.
Also see items on Commercial Property and Buy to Let
