The question comes up very often when you want to invest in commercial walls.

If each solution has advantages and disadvantages, it is important for the future buyer to go around the question, to determine which of the two options suits him best.
Chasse Privee is here to help you make the right decision!

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A. Money, accounts, company cash: 

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The question of financing is decisive and self-evident, especially since the opening of commercial premises requires the mobilization of large sums of money, especially during the start-up phase which involves having a strong enough cash flow to cover three to six years of activity, before the project becomes profitable and reaches financial equilibrium. If your finances allow it, therefore prefer the purchase, given the many advantages that this option has, especially if your business is particularly flourishing and your landlord has no problem selling you the buildings. A purchase also allows you to have visibility on your long-term expenses, which rental does not allow.

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B. Diversify your assets: 

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By investing in a commercial property, you brush aside all the problems inherent in the rental contract: such as the increase in rent, the expiry of the rental contract, the risk of evictions, litigation with the lessor, etc.
In addition, the acquisition of commercial walls is a smart way to enrich its real estate heritage. From a legal point of view, this acquisition can be done in several ways: either directly or via a civil real estate company (SCI). Buy offices properties via a Société Civile Immobilière (SCI) has many advantages.
This allows in particular to separate its own real estate assets from the assets related to its activity, in the event of bankruptcy of your company, your real estate assets are protected. The SCI also makes it possible to transmit separately the heritage of exploitation and the real estate heritage, which constitutes an excellent protection for the family heritage.

C. Tax advantage: 

Tax optimization can be done very simply thanks to 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. Income generated by shop walls is taxed under the property income regime. So, the charges and other works are deductible from the rents when they are declared to the tax authorities. It is possible to create land deficits which will be deducted from land income, without however exceeding €10,700 per year. With regard to the possible surplus and the interests of loan, they are imputed on the land incomes of the ten following years. The main advantage of this mechanism is to lower the tax base, which translates into less tax payable and optimized taxation, especially for people who already have rental property assets. If you decide to resell your premises, the owner of the walls will be able to keep the premises and rent officesof the goodwill to a buyer, with the aim of generating an additional gain over the long term.

Unlike renting, any investment in renovation or development work improves the value of the walls and enhances the heritage.

D. The advantages of renting

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A purchase requires having a clear vision of the development of the project in the long term, 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 meters in a building is relatively easy. This allows flexibility and optimal profitability depending on the number of employees.

Since the 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 has his own premises. Another not insignificant aspect is the very small initial financial commitment, which allows cash to be saved which can be devoted to other investments.

You are still undecided, ask us for advice.

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