The latest changes in Portugal Golden Visa have made investors across the world sit up and take notes about forwarding their applications. Though a couple of them are taking the conventional way of real estate investments, others are more interested in investment funds. Now, both methods have their own pros and cons that you need to consider beforehand.
With that in mind, here’s giving you a complete comparison between investment funds and real estate for the ones seeking a Golden Visa in Portugal.
Advantages of Investment Funds
1. Lower Costs
Investment funds do not have unnecessary costs, such as title transfer, stamp duty, transfer fees, and so on that you face in real estate. Also, you don’t need to spend on essentials like furniture and utilities like you do with real estate. You just need to make a one-time investment worth €500,000.
2. Lower Taxes
Being a non-tax Portuguese resident means that you will not have to pay capital gain or income taxes on that investment fund. But real estate means paying at least 30 percent withholding tax on the gains. Plus, the capital gain also comes under a reasonable flat rate of 28 percent. Real estate ownership also involves paying annual income tax if you rent out your property.
3. Hassle-Free
With investment funds, meeting the minimum investment requirement and fulfilling other formalities while applying for the program is necessary. The rest of the responsibilities will be handled by your fund manager. All you need to do is pay up the management fees – still a lot less than managing an actual property.
Think of hiring a property management company to take care of your real estate investments. It’s both costly and a hassle.
Advantages of Real Estate Investment
Don’t let the above discussion make you think that there is nothing good about a real estate investment. It comes with the following perks:
1. Greater Control
The fact that you have more control over your real estate investments is one of the main advantages of it over investment funds. After you make the investment in real estate, you can do anything you like with it – rent it out, stay in it, or sell it – the choice is yours. But the investment is controlled by the fund manager in the case of funds.
2. No KYC Process
Fund investments need a complete Know-Your-Client (KYC) process. You will have to show your income proof and your source of income. On the other hand, real estate investments are simpler and do not require this process.
Key Takeaways
- Investing in investment funds does not incur the same taxes as purchasing real estate does
- Real estate purchase gives you more control over your investment as with the funds you have to rely on the fund manager
- When you make a real estate investment, you’ll need to work with a property management company if you’re not going to live in Portugal full-time
- With the fund investment, you benefit from the expertise of the fund managers and advisors
- Fund investment process requires a KYC process whereas, with the real estate option, this is not required
Investment Fund vs. Real Estate: Which Is Better for Portugal Golden Visa?
The answer to this question depends on you. When you want a monthly earning from the investment, you can go for real estate. But when you want better returns on your investments, funds can be a better choice.
The choice is all yours. Choose the one that you feel comfortable investing in. If you feel more inclined toward the funds, feel free to contact us for more guidance and a personalized call with our advisors.
