Buy a commercial in my name or in the name of my company?
Patrick Gordinne Perez2024-12-05T18:49:54+00:00Your company develops its activity in a rented premises. However, as the business is going well, he is considering acquiring one in ownership. What suits you best: buy it yourself and rent it to your company or let it acquire it?
This is a typical question that many of our customers ask us,
In this article we give you some tips to know if it is better to buy a property as an individual or as a company, but you always have to study case by case.
Buy the premises in your name or in the name of the company? What suits you better?
You buy: prudent option
If you are a majority partner of your company and are going to acquire a place for it to carry out its activity, in general the most prudent thing is that you are the one who acquires the premises and then rent it to your company.
In the event that the company bought it and it subsequently had difficulties, the property could be lost when it was seized by the company’s creditors.
On the other hand, if it is in your private assets, it is more difficult for you to end up responding to the risks of the business.
Analyse pros and cons
However, when making the decision you must also weigh other economic and fiscal aspects that can make the most convenient option for your company to acquire the premises.
See them below.
Economic and legal aspects of buying a commercial
Liability in the event of non-payment
First of all, you should be aware that you may also be liable for your company’s debts out of your personal assets (i.e. your premises and the rest of your assets):
- If you are a director of the company, you may be personally liable for the company’s unpaid debts if the judge finds that you acted negligently.
- You may also be liable on your assets in specific cases where you personally guarantee a company operation.
Financial image of the business
Secondly, if your company acquires the premises, it will improve its liquidity and financial image in the eyes of banks, customers and suppliers – especially if part of the purchase is financed by contributions from shareholders.
On the other hand, if your company operates from rented premises, your image will be less positive.
Tax aspects of buying premises
ISD and assets
On the other hand, if the premises form part of the assets of your company, as they are used for an economic activity, you will not have to pay Wealth Tax ( IP) on it –shares in companies with economic activity are exempt – and you will enjoy a reduction of at least 95% in Inheritance and Gift Tax ( ISD) in the event of transfer by inheritance or donation (you must meet certain requirements for this).
Remember, the first 500,000 euros are exempt from wealth tax in the Valencian Community and the main residence does not count.
If the premises are in your personal assets, you will not benefit from incentives, unless you have at least one full-time worker to manage your rents (and this hiring is essential).
New premises and SMEs
Finally, if your company is small and you buy new premises, you will be able to depreciate it more quickly by deferring the taxation in the Corporate Tax and obtaining significant savings (if you meet a series of requirements).
For these purposes:
- Your company will be able to take advantage of the SME double depreciation and depreciate the premises twice as fast. So , if you have bought an industrial building, you will be able to depreciate it at a rate of 6% per year, instead of 3% (which is the maximum depreciation coefficient in the tables).
- And if your company increases its average number of employees at the same time as you buy the premises, you can depreciate it even faster. You can freely depreciate (even all at once) up to 120,000 euros of the depreciable value of the premises for each employee that increases the average number of employees.
While it is true that if the premises are in your personal assets you will reduce the risk of losing them in the event of a downturn in business, consider also the tax and financial advantages of having your company listed as the owner.
Advice from Asesoria Orihuela Costa
- If it is the company that has the money, buy in the name of the company.
- If you are the individual who has the money, make a loan to the company, see here what a loan between individuals consists of and how to manage it.
- When buying premises, do not forget that you can waive the ITP and pay the Iva and make the inversion of the taxable person in order not to have to pay the Iva.