{"id":210,"date":"2013-04-18T22:59:22","date_gmt":"2013-04-19T03:59:22","guid":{"rendered":"http:\/\/www.RealEstateAnalysisFREE.com\/blog\/?p=210"},"modified":"2021-04-20T04:00:21","modified_gmt":"2021-04-20T09:00:21","slug":"optimal-holding-period-calculation","status":"publish","type":"post","link":"https:\/\/www.zilculator.com\/blog\/optimal-holding-period-calculation\/","title":{"rendered":"Optimal Holding period calculation"},"content":{"rendered":"

Economically the most accurate method of calculating optimal holding period is based on net present value. We can calculate NPV of the investment, when it would be hypothetically sold in each year \u2013 starting from year 1 going till, for example, year 30. Then the highest NPV is chosen from these 30 values and the according year will be the optimal holding period. Since it is calculated from NPV, it takes in account the time value of money and is counted with Cash Flow after taxes<\/a>. Sometimes the optimal holding period is shorter than the length of the mortgage and the reason is the shortening tax shelter, due to a smaller interest part of the mortgage payments every year. In the first years of mortgage, most of the mortgage payment is an interest payment with small principal payment and since the interest part is tax deductible, it creates higher tax shelter.<\/p>\n\n

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