How does passive income work with investment real estate?

We answer these and many other questions in our video blog editions.

Here is the transcript of episode 39 to read:

Real estate income or passive income is so nice because every month you have someone paying for your investment property. That's two. That's the biggest part: often the tenant, because the tenant pays the rent every month and therefore the biggest part of your mortgage and pays off the investment property for you. That's huge fun, because you're buying a property, but somebody else is paying it off.

The second part is the tax office, because through the tax benefits you often get monthly tax benefits. I'm sometimes asked, "Why monthly? When I do my tax return, customers tell me, I don't always get my taxes back until the following year. And then I always have to pay the tax benefits in advance. Then I have a much higher monthly burden and have to wait for a tax refund in the following year.

And I can tell you that the real estate has a great advantage. Because with real estate, you have a legal right to collect the tax benefit monthly from the year after the purchase, because you can then submit a very simple form. At the tax office. And this is the income tax reduction application and then an allowance is entered on your tax card and you get the tax benefits paid directly every month.

So you have the rent and the tax benefits every month on your account. So you never have to pay anything in advance and you only have your own small share, which you pay yourself. And this income tax reduction application is only made once and can then simply be updated in subsequent years. That means you decide whether you want to get a big chunk of tax benefits back once a year, but then you always have to pay it forward up to that point. Or would you prefer to apply for the tax benefits on a monthly basis? And for the very smart ones among you, who now believe that I can take both, let me tell you: it doesn't work. Either monthly or annually. If you take the tax benefits every month, you won't get them on top of that in the following year as a one-time payment, but only one of the two. Decide how you want to have it.

The fact is: I have a positive message for you in any case. With the investment property you have two incomes, rent and tax benefits and most of my clients want that monthly.

Keywords:

Passive income, investment real estate, tenants, tax benefits, tax office, income tax reduction application, rents.