Having your own business premises: It really is worth considering

If there’s one thing that adds value to a business it is ownership of its own premises.

Not only doesit provide the opportunity for the business (or business owner) to own an asset that can appreciate in value, it provides an avenue to earn a long term income stream for the owner into the future.

Another good reason for assessing the possibilities of owning the premises is that with current interest rates being so low, the mortgage payments could well be less than the lease paymentsfor a comparable or larger workspace, thus saving money on a monthly basis, providing additional space and allowing for business growth.

It also means you can fix your monthly property expenses, removing the risk of rental increasesand you can keep a tighter control over the property outgoings.

You can provide your business with a customised premise that exactly suits the need of your business rather than having to adapt your business to what is available on the market.

Finally if you or a related entity (perhaps your own super fund) is the landlord you are earning the rent your business is paying, rather than sending it off to some third party.

Tax deductible
Like lease payments, it’s worth remembering that the interest payments associated with investment loans can be tax deductible, meaning they can be claimed as a valid business expense.

Having its own commercial property gives a business the flexibility of buying larger premises than it needs, allowing it to offset costs of development by way of either the subletting of additional space in the building to generate rental income or the sale of additional floor area in a unit type scenario, perhaps paying off the remaining portion of the building.

Eliminate frustrations
By owning your own you eliminate the frustration of having to speak with a real estate agent who has to speak with the property owner in order to get things done in the premises. It’s you who decides on maintenance issues and other building related concerns.

Another point for consideration is that if you’re one of the many business proprietors with a Self ManagedSuperannuation Fund (SMSF) it is worth giving consideration to the idea of using this fund to build premises for your business – and the business then renting the premises from the Fund.

If you’re interested in looking at what you can do in respect to development we can give you a good idea of what you can build for a given price while Nathan Gudgeon of Nationwest Finance Solutions can help in organising the finance (1300 888 474).


 

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