Owning a house has been the dream of many for a long time, more so in the current economic times that are tougher and mostly unpredictable. In the recent past, owning a house has become a tricky undertaking, with costs hitting the roof and making such a venture prohibitive. To this end, cheaper and seemingly more convenient means of owning a place to call home have ‘cropped up,’ and one of the most common modern-day options is a condominium – short form ‘condo.’
A critical fact that is coming to light is that the value of a condo unit is subject to change due to a lot of factors. In comparison with the value of other properties seems to appreciate over time, as well as that of the land, a condo’s rate of appreciation is not at par. This is primarily because owning a condo unit only translates to holding the space that is around your enclosure, nothing more. In this regard, one is in no way own the land, which happens to accrue the most significant value over time.
To effectively determine the value of a condo, it is fitting to keep in mind the costs that accompany it during the ownership period. The accruing costs primarily bring down the ultimate resale value of the unit. A notable factor that drags its value is the physical depreciation of the units themselves. Five decades is by any standard a long time for a property, and it is prone to tear and wear– an occurrence that bears the effect of lowering the value of the condo. By and large, there are monthly memberships as well as maintenance fees that one has to pay, and which cumulatively turn out to be a substantial amount.
The law on its part is barely vague regarding the lifespan of a condo, although it seems to imply that the ownership of the same is void after five decades. If an owner is interested in reselling the apartment, there are mandatory costs incurred before closing the deal. Capital gains tax is a cost that one cannot evade and any VAT that is subsequently accrued about the sale. These taxes have to be paid before transferring the ownership of the property.
In the instance, one is lucky enough to get a buyer after this time – 50 years, deducting the accrued costs, together with the taxes payable at the time, the returns may prove to be extremely minimal. This is because, contrary to popular belief, the cost of acquiring a condo is not the only cost that one incurs. Moreover, the price of the apartment after this period may be primarily affected by its location. Time plays a very crucial role in the value of a property, and a place that may be in high demand at present may be worn out by urban decay.
To this end, the value of a condominium may over 50 years differ broadly, and be affected by many factors, including its location. It is thereby essential to be ready for the eventuality that the value of a condo depreciates when such a period expires.