Owning a business and making decisions is an everyday process that goes hand in hand. But making decisions to purchase your own business space or continue renting one is a commitment that is not made easily.
As with any other things in life, there are both pros and cons to both and what suits one business won’t necessarily mean that it will fit your own. You may have a business that requires you to move locations depending on the season or one where you need to stay grounded on one place in order to establish a following. Here are the pros and cons to buying your own property.
But let’s start with the cons this time.
The Disadvantages of owning business property
Cost! While renting only requires a fraction of a cost owning entails, getting your own space requires a considerable deposit that you can use in other business purposes.
Owning a business property means not being able to relocate your business when you want. You’ll find it hard to offer your products or services in other locations with good opportunities. Relocating from a rented space is much easier than selling your property or finding a new tenant to stay.
Your property also comes with more responsibilities – you need better security, fixtures or fittings as well as big investment for maintenance.
The main advantage of simply renting a business property is that your initial outlay of cash to gain the use of an asset is usually less for renting than it is for buying.
The Advantages of owning business property
Properties naturally increase in value over time.
Your mortgage repayment can be cheaper than renting the same property and your investment isn’t just going into someone else’s bank account.
You get better control over your finances and therefore more security since you won’t be exposed to any costly rent increases. Moreover, if you take out a fixed rate commercial mortgage, you can set costs knowing exactly how much you’ll spend on the premises monthly.
Interest payments for commercial mortgage are tax-deductible.
If you are not going to use the entire building space, you can rent part of the building and recover some of your expenses.
Perhaps the main advantage of obtaining is that you end up paying out less in the long term than you would have if you just rented the facility. Moreover, as stated above, you get the advantage of any appreciation in the value of the property
WHAT YOU OWN, YOU CONTROL
Owning your business space means, you have more options for how to use the space. You can modify the premises as your business requires as well as make structural changes to it. Consider the properties for sale on McGrath as they offer multiple property types that will suit your business requirements.
If the property is yours and you decide to sell it and move the business, capital gains and recall of capital cost allowance could be prompted. Replacement property rules allow you to submit the taxes on the revenue of the sale of the building.