Commercial properties offer a variety of benefits
Most business owners will have to decide sooner or later whether they want to rent or buy office space. The factors to consider before making such an important decision are numerous.
As a practice grows, dentists may need to lease office space if they don’t know how much space they will need in the future.
In general, buying a commercial property can be an excellent investment choice for physicians with a solid financial profile, an attractive future growth forecast, and the ability to capitalize on tax advantages.
Some of the advantages of owning commercial property include:
LOWER PRICES THAN EVER
Compared to the recession, dentistry has seen a significant drop in the cost of commercial properties. It is sometimes cheaper to purchase and outfit commercial real estate than it is to build out and lease leased space.
The prices of residential and commercial property will likely appreciate in time at today’s lower prices, despite the fact that they will not likely go up as much as they did between 1998 and 2005. The increase will benefit property owners.
FRIENDLY RATES ON FINANCING
Mortgage rates are the most significant element of home ownership costs. Rates for commercial real estate in Melbourne have hit an all-time low, allowing you to save substantially on your commercial mortgage.
Financing your practice is still difficult, so make sure your financial profile is impeccable and you develop a business plan that proves its viability.
When looking for financing for a dental practice, it is also important to consider a lender who understands your needs.
APPRECIATION OF SHARES
Getting more space for your practice increases its value without putting its value at risk. As a result, you will be able to manage its growth better.
Furthermore, you will have a greater variety of retirement options. Commercial properties can be sold outright at retirement or leased, which generates ongoing income.
You can sell your practice and underlying property outright or lease the practice but keep the property.
FLOW OF CASH OPPORTUNITIES
If you buy a commercial property that has tenant space, you can receive rental income as part of your cash flow.
By paying down the purchase price, the tenant income can offset the investment. In the event that you have tenants, the responsibility of managing their property may distract you from treating patients.
ADVANTAGES OF TAXATION
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Your tax return allows you to deduct the interest paid on mortgages during the year by depreciating your assets. As a business owner or property owner, you may also be eligible for several tax deductions:
- Tax deductions may be allowed under Section 179 of the IRS Tax Code for equipment and furnishings that are placed in service the same year they are purchased. Over the past three years, Congress has provided a generous deduction of $500,000, which can be used to offset the cost of property purchases.
- Adding wiring and lighting to the building will reduce building maintenance costs for the next 39 years as a result of depreciation.
- A similar or like property can be purchased using the proceeds of a sale of an investment property used in a trade or business without triggering a tax liability.
- For a tax penalty to not apply, the value of the purchased property must be equal or greater. By doing this, practitioners can expand their practices to a larger facility as their practices grow without paying tax penalties.