Using 'the system' to legally not pay tax

[disconnected]

I have been reading lots on this forum the last days, which has been very informative, but why isn't there more talk about how to use the western banking and tax laws, i.e. 'the system' to our advantage?
Pretty much what the likes of Robert Kiyosaki preaches.

In a nutshell, using debt and real estate to deduct interest and depreciation ending up with zero income tax to be paid.

Is this a viable strategy in EU? I think interest deduction and depreciation laws aren't that favorable in the EU as in the US, but I'm not 100% certain.

I'm considering getting started with real estate in Portugal in 2022. The idea is to acquire one or two properties per year, 70% financed. Most likely Airbnb rentals as short-term tax laws and general laws are more favorable than long-term rentals here. Added benefits include of course appreciation, ability to refinance later on, building up a second business in case my primary business goes bust, and building a passive retirement portfolio.

 

[BigUnicorn]

I don't think you'll find a satisfactory answer here simply because in the EU the code is still quite different country by country

 

[JimBeam]

Not a bad idea but keep in mind:

1. In some countries buying an apartment is not tax deductible expense for a company unless your company is of a specific nature or has a specific license... check this with the local accountant or lawyer... It is deductible for the office or productions space (aka "work" space) purchase but not for "living" space and company doesn't perform any activities there..
2. In some countries you need a license for Airbnb rentals (some cities in Spain I think) and it's quite hard/expensive to get one... Also read this well -> Responsible hosting in Portugal - Airbnb Help Center
3. Getting financing for a property as a foreigner might be more difficult to obtain or may be more expensive
4. Property market might go down so you'll be paying a mortgage/credit/loan at a higher rate for a property that now costs less on the market (so you might lose 3 ways as the property market went down so your property costs less, property is getting older - amortization is higher and you're paying a high montage rate for it).
5. Nobody knows when this COVID thing will end so Airbnb returns might not be reliable (cash flow issues)

So, you really need to factor all this in.
Maybe it's a good time to buy if due to COVID the prices are down for the properties you are planning to buy.

I don't know what kind of money we are talking about here but have you considered investing your money in REIT stocks (What's a REIT (Real Estate Investment Trust)?) and pay all the taxes. They provide steady returns and you'll have nothing to work/worry about and focus on something else. But if this is your passion and this is what you want to do in your life - then go for it!

 

[disconnected]

Thanks for the REIT suggestion. Something to learn about for sure.

Looks like property investing outside the USA is perhaps not as lucrative. Unfortunately laws in the EU are more favorable for tenants than landlords. It can still be a good and profitable investment but there aren't the same kinds of tax incentives etc.

From what I've heard, in Portugal, mortgages are pretty easy to get up to 70% LTV.

Anyway I will consult a local accountant soon as well.

 

[JackAlabama]

Thanks for the REIT suggestion. Something to learn about for sure.

Looks like property investing outside the USA is perhaps not as lucrative. Unfortunately laws in the EU are more favorable for tenants than landlords. It can still be a good and profitable investment but there aren't the same kinds of tax incentives etc.

From what I've heard, in Portugal, mortgages are pretty easy to get up to 70% LTV.

Anyway I will consult a local accountant soon as well.

You will also find lots of REITS in listed on Singapore Exchange and Hong Kong Exchange providing a large variation of services (datacenters, residental, business, warehouse etc) and having a diversified portfolio.