At some point or another, you may be considering purchasing property for your business. If you are not well versed in real estate transactions, it can be a little confusing. For instance, is the process similar to that of buying a home or is it quite different? It is best to have a good grasp of the proceedings so that you don’t make any missteps along the way. Here are the most primary and significant aspects of buying real estate for your company:
Deciding on Proprietorship
There are three types of ownership that you can choose from when it comes to buying a building for your organization. The first is owning the structure and land outright, by yourself. This means that you own the building completely. This option has the advantage of CGT discounts and perhaps even tax savings. On the other hand, there is a certain amount of risk involved. Then you can choose to put the building in your company name. While you do forego the discounts, there is the benefit of having asset protection. Last but not least, is making the purchase in the name of the trust. Not only are you offered asset protection, you also get the benefit of a 50 percent CGT discount as well. You will need to weigh the pros and cons of each of these choices to decide which one makes the most sense for you.
Making the Necessary Preparations
Just because you have found the property that you want to buy doesn’t mean that all of the details are sorted out. There is still some ground to cover. To start with, you will need to get your hands on the property certificates. This to guarantee who owns the title for the land and the building. You also get the benefit of finding out about all of the details and elements of the structure as well. There are also certain legalities involved as you are buying the property for a business. Therefore, you will need a lawyer for is well versed in such matters. They will be able to discern precisely how to the structure the proprietorship and the sale of the property.
Use Cost Effective Approaches
Some of the benefits to making such a purchase is that there are certain deductions that can be made later on. Of course, this does depend on whether or not you choose to arrange things in such a way. For example, you may want to consider getting a depreciation report. This way, as the building gets older and certain things lose value, you will be able to claim tax deductions. Now, depending on the ownership structure, you may have to pay ‘rent’ to the third party owners of the land. This is when negative gearing may become useful. In the event that the operational costs of the property overtakes the rent, there may be tax deductions involved.
Be Fully Aware of All Consequences
Before making any final decisions, it is best to take a moment to understand the magnitude of any document that you are signing. This is not just from your current point of view but also in the event of specific future events. A good example would be in the case of bankruptcy. How is the particular configuration of the sale going to help, harm, or effect the property at a later date?
These are the basics of buying real estate for your business.