Why should some SME’s buy their office space?
No two cases are alike, of course, but given that we are experiencing a period of economic prosperity for businesses and in particular for many SME’s in Belgium, that interest rates are set to fall, that taxation is advantageous, etc… why not take the plunge?
What are the advantages?
- Buying property is synonymous with security and stability, both for banks, which can finance a project with good guarantees, and for companies looking to diversify their assets.
- An undeniable tax advantage. Buying the company’s own offices is also an opportunity for SME managers to build up a property portfolio at the company’s expense and to reap the rewards at the time they retire. There are several tax arrangements – that differ according to each individual’s situation – that can enable them to reclaim a property asset as part of their private assets.
- You’re in charge! As a landlord, it’s up to you to decide when to carry out any work, renovations or other projects. Tenants are always dependent on the landlord’s goodwill for this.
- In addition, the company can deduct all costs and expenses.
What are the purchasing options?
- A private purchase. You buy your offices and then lease them back to your company. But beware of the tax implications: business rents are not taxed in the same way as private rents!
- A company purchase. Your company buys its offices directly, which increases the value of the company, reassures your customers and gives you more freedom to carry out any work. Again, the company can deduct the costs and work carried out on the property. However, if the property is resold, any capital gains will be taxed.
- Have you thought about joint ownership? What’s that? In Belgium, it is possible to acquire a property in the form of a split purchase between your company and yourself, with one part in bare ownership and the other in usufruct. This technique is legal but certain criteria must be met, otherwise the authorities can challenge the arrangement.
Conclusion
Without wishing to be exhaustive, there are a number of ways of purchasing property within a company, and this is a real alternative to renting office space. As every situation is unique, it’s essential to seek advice from one or more professionals! Feel free to contact us if you require further information.
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brokerage@esset-pm.be
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