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Semi commercial property purchase

Purchase through sole trade business, or personally?

Didn't find your answer?

I think I am overthinking this!

But what is the best course of action for a purchase of semi commercial property? The property is a shop with a flat above it.

Apologies if this is fairly straightforward, it's not something I have dealt with previously.

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By Paul Crowley
22nd Nov 2021 10:10

Same owner however he pays for it

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By Paul Crowley
22nd Nov 2021 12:22

Assumed sole trade business means NOT a company

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By tom123
22nd Nov 2021 10:15

Owning property personally saves tax hassles when the time comes to take the property out of the company.

But, like all things property, if it's not your area then get paid advice from someone whose it is - as there are big amounts usually at stake.

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By David Ex
22nd Nov 2021 10:20

With so few facts, I don’t think anyone can give a meaningful response. What’s your particular area of concern?

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paddle steamer
By DJKL
22nd Nov 2021 10:33

Are you borrowing money?

What is commercial property to be used for, the activity of your sole trader business or something else?

What about residential unit, what are your plans re this?

Etc,Etc,Etc

An accountant, face to face, will have many other questions, your replies will prompt extra questions from them, the decision making will be iterative.

If I were you I would chat through with your accountant who can gather in all facts (age/matital status/children/aims/plans/goals etc) and hopefully offer you some considered, made to measure, approaches you may take.

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Replying to DJKL:
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By Hugo Fair
22nd Nov 2021 13:33

All good questions ... however with a prior history of 4 questions in 4 months but zero responses, you may be waiting a while for them to be answered. :~)

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paddle steamer
By DJKL
22nd Nov 2021 13:42

Horses, water, drink.

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By Tax Dragon
22nd Nov 2021 14:21

What's the issue bothering you?

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RLI
By lionofludesch
22nd Nov 2021 15:53

You certainly didn't overthink phrasing the question.

What's the owner going to do with it ? Rent it out ? Trade from it ? Live in it ? Convert it into flats ? Bit of two or three of those ?

The answers will be coloured by the owner's intention.

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By Anonymous
22nd Nov 2021 16:32

Apologies, I left out a lot of information, unintentionally!
So the premises will be purchased with a mortgage.
My client will be trading from the shop and living in the flat. They are a sole trader - unincorporated.
I agree with Paul, in the way that ultimately it is still the same owner regardless. However I thought there may be other things I could be overlooking (due to not coming across this in my career before).
Are there any benefits to holding the property as part of the business rather than personally?

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By Paul Crowley
22nd Nov 2021 19:27

You could add it to the accounts, but then the mortgage should be on the balance sheet as well
Rent not an issue
Cannot rent from self

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Replying to Paul Crowley:
RLI
By lionofludesch
23rd Nov 2021 07:30

There's a mortgage. Is the amount borrowed greater than the value of the business premises? Was anything else bought at the same time? Such as a business?

It'd be nice to have some independent valuation of the business and private elements of the premises.

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By Tax Dragon
23rd Nov 2021 07:05

DJKL's and lion's detailed questions notwithstanding, have you actually thought about what you mean by phrases such as "purchase through sole trade business" and "holding the property as part of the business rather than personally"? What would look different one way or t'other?

But I think it can make a difference. In theory anyway - in practice I reckon pragmatism probably dispenses with theoretical differences in such situations most of the time. But the existence of theoretical differences (coupled with particularly DJKL's question set, and David's offer of a meaningful response once you supplied further details) is enough to say there are issues - and it's never overthinking to consider issues.

Issues come to the fore in particular situations. Say your client were to dispose of the business (eg sale or incorporation), what would he want to include?

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