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Renting or buying your future office?
This is a question that comes up very often when you want to invest in commercial property. While each solution has its advantages and disadvantages, it is important for the future buyer to consider the issue in order to determine which of the two options is best suited to him.
Chasse Privée is here to help you make the right decision!
Money, accounts, company treasury :
The question of financing is decisive and self-evident, especially since opening a business premises requires the mobilisation of large sums of money, particularly during the start-up phase which implies having a cash flow strong enough to cover three to six years of activity, before the project is profitable and reaches financial equilibrium. If your finances allow, you should therefore opt to buy, given the many advantages that this option offers, particularly if your business is particularly successful and your landlord has no problem selling you the premises. Buying also gives you visibility on your long-term expenses, which renting does not.
B. Diversify your assets :
By investing in a commercial property, you sweep aside all the problems inherent in a rental contract: such as rent increases, expiry of the lease, risks of eviction, disputes with the lessor, etc.
In addition, the acquisition of commercial premises is an intelligent way of enriching one's property portfolio. From a legal point of view, this acquisition can be made in several ways: either directly or via a property company (SCI). Buying commercial offices via a Société Civile Immobilière (SCI) has many advantages.
In particular, it allows you to separate your own real estate assets from the assets related to your business, so that if your company goes bankrupt, your real estate assets are protected. The SCI also makes it possible to transfer the operating assets and the real estate assets separately, which constitutes excellent protection for the family assets.
C. The tax advantage :
Tax optimisation can be achieved very simply through natural mechanisms and simplified actions.
If it is the SCI that buys the offices, it pays transfer duties amounting to 5.80% of the price. The income generated by the shop walls is taxed under the land income system. In this case, expenses and other works are deductible from the rent when declared to the tax authorities. It is possible to create land deficits which will be deducted from the land income, but not exceeding €10,700 per year. Any surplus and loan interest are deducted from the next ten years' property income. The main advantage of this mechanism is that it reduces the tax base, which means less tax to pay and optimised taxation, particularly for people who already have rental property. If you decide to resell your premises, the owner of the walls can keep the premises and rent the offices to a buyer, with the aim of generating an additional profit in the long term.
In contrast to renting, any investment in renovation or refurbishment work improves the value of the premises and increases the value of the assets.
D. The advantages of renting :
A purchase requires a clear vision of the long-term development of the project, to avoid any risk of running out of space after a few years. Renting offers greater flexibility, as the tenant can move if necessary, and is protected for nine years with the possibility of leaving the premises every three years. Often the acquisition of additional square metres in a building is relatively easy. This allows for flexibility and optimal profitability depending on the number of employees.
Since Covid and the massive arrival of teleworking, offices are often unoccupied several days a week. With the rental of commercial offices, the separation of a part of the premises is relatively easy compared to the resale when one owns one's own premises. Another important aspect is that the initial financial commitment is very low, which means that you can save cash for other investments.
If you are still undecided, ask us for advice.
Do you need help finding your commercial premises ?
It's time to contact Chasse Privée, come and discover our client testimonials.
We offer support throughout your project: tailor-made, according to your project and your activity.