Commercial Property Investor Podcast What Are The Hidden Purchase Costs For Your 1st Commercial Building
I talk about the various costs involved in buying a commercial building, highlighting the importance of considering VAT, land and buildings tax, lawyer fees, title searches, finance fees, and accountant projections.
I also look at the need for surveys, feasibility studies, and insurance, and tell you why you need to be aware of ongoing costs such as utilities, fibre installation, and business rates.
KEY TAKEAWAYS
- VAT (Value Added Tax) is a significant cost to consider when buying a commercial building, as it can add an additional 20% to the purchase price.
- Land and buildings tax, or stamp duty, is another cost to factor in when buying a commercial property. It is a progressive tax that increases with the price of the building.
- Lawyer fees, both for the buyer and the bank, are necessary expenses when purchasing a commercial building. Additionally, if the building costs over a certain amount, separate legal firms may be required.
- Accountant projections may be needed when seeking bank financing for a commercial property. These projections provide a professional assessment of the financial viability of the project.
- Ongoing costs to consider after purchasing a commercial building include utilities, insurance, business rates, and water charges. These costs can vary depending on the size and usage of the property.
BEST MOMENTS
"One of the key ones that a lot of people actually forget about, and if they're working with the same advisors they do with residential, their advisors may not necessarily bring this up until the last minute, when they remember, it's actually the big one: VAT."
"Land and buildings tax could be less than RESI, might be slightly more depending on what the size is, but VAT does need to be included in that."
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Useful Links:
CPI Website - https://commercialpropertyinvestor.co.uk/
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