Property Or Cash For Next Generation? Asset Or Liability? Legacy Planning?
If you want to leave a property for your children, the value of the property should be appreciating.
Investing in assets that are appreciating may be a better alternative to buying a depreciating property.
Without a robust plan for where and when to shift, it might be better not to sell.
Many homeowners intend to leave their property for retirement or for their children to inherit.
However, there are a few factors to consider when leaving the property for the future generation. Importantly, the value of the property must be appreciating; it should be an asset, not a liability. Should the property be depreciating, your children may find it difficult to sell off the unit and may receive less than the initial value. An alternative will be to purchase a smaller unit and invest the remaining in appreciating assets.
Let your money work for you. Understanding the characteristics of your property will help you determine its long-term value. However, you may face a dilemma when deciding when to sell your property. For example, BTO and EC buyers are allowed to sell their unit once they reach TOP or 5-years MOP. Even though the value of their unit is likely to appreciate during this period, they may incur agent fees and stamp duty when selling their existing unit and buying another. In fact, the new property they buy may not even appreciate. As such, without a robust plan for where and when to shift, it might be better not to sell.
Every decision - be it for retirement or inheritance - should be carefully considered and informed. If you are unsure, feel free to reach out to me for a free pre-consultation.