One of the questions that are always on the savvy businessperson’s mind is if they should buy or lease office space. This decision can be as tricky as it would be to buy (or lease) a house. There are many things to consider when it comes to moving a business out of the garage and into a building. It is a big, exciting, and scary step.
If the business owner has decided to buy a building for their money making baby they have to consider several things, business growth, taxes, appreciation factor, and building upkeep. Any office space that is bought may outgrow the building. If this happens a new building will have to be bought, the old one sold or leased out, or two buildings will have to be taken care of (one of those being a new one that is purchased.)
Then there is the matter of taxes when owning a piece of commercial property. All repairs made to the office space can be written off during the tax season but that isn’t much considering the business can write off everything paid in rent for an office space. Improvements to an office building can be taken off over 39 years. Honestly it would be best to consult and attorney or a tax professional to see all the tax benefits between renting and buying an office space.
Another thing to consider is the appraisal of the building. If it is on prime real estate it could go up in value. If this building is in the slums of New York in some back alley where people are doing questionable things, the likelihood of making any money from it are very low.
There is also the building upkeep for the office space. If renting the owners of the building have to shell out any cash for any damage. The owners also can be tricky and make it so they can kick a person out whenever they please or up the rent. Be sure to carefully read any contracts being signed.
Ultimately the choice to rent or buy office space depends on the business. If the business is booming buying isn’t a bad idea. If the business is just starting out, renting may be the safer route. It is easier to move from a building that is being rented rather then one that is bought.
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