Since the property prices are rising, a lot of investors have started to invest in real estate. The major trend relates to residential properties. These properties are bought for either capital appreciation or rental purposes.
Previously, making investment in property was only possible for older and richer people. These types of individuals usually possess reasonable savings. However, banks and developers are now offering innovative and unique financing options. Hence, it is possible for the younger people to buy properties.
Within the past decade, various investment experts tried to help people with the art of making an investment. Their main focus was young people and employees. They also taught how to invest in properties and generate income streams after retirement, i.e. “passive income”.
The prevailing trend of investing in property is making things easier for investors to own a property. This is just the beginning of the property business boom. Most of the individuals applying for property loans are in their 30’s. On average, they own 6 properties.
Besides, owning a property under a company is more beneficial. In this article, we are going to discuss that why you should consider buying property under a company’s ownership.
Advantage1: Using Expenses for Reducing Rental Income
The most prominent benefit relates to the use of expenses for minimizing rental income. For instance, you can declare minimum profits and pay low taxes. However, if the individuals aren’t declaring the rental income as their business income, the rental expenses can’t be deducted.
For instance, expenses on the furnishing of your property i.e. furniture and renovation aren’t deductible. The capital allowances associated with an asset can reduce a company’s profits. However, this reduction is not allowed to an individual.
Advantage 2: Quick and Easy disposal
On average, it takes over 6 months for an individual to sell a property. This is so, as you need to complete the process of title transfer prior to the completion of a transaction. On the contrary, disposing of a property owned by the company is easy.
The transaction process is much faster, and it mainly depends on the payment capacity of a buyer. For this purpose, you just need to transfer the company shares owned by you. This finalizes the process of share transfer. In order to write down the sale and purchase agreement, make sure to hire a well-reputed lawyer.
Advantage 3: Easy to Plan Succession
This process is identical to the disposal of shares. However, in this scenario, the shares are transferred to children or spouses. Hence, the best possible idea is not to receive any money when transferring the shares.
The process takes less than expected time. The succession process can be completed even before the property owner passes away. This also helps to avoid delay and high cost while completing the transactions for transferring the property under ‘Will’ or ‘Estate’.
To conclude, the benefits of owning a property under a company are numerous. However, if you don’t own a company, you have to bear the cost of incorporating a new company. Besides, there are a few other statutory expenses, which are associated with the maintenance of a company.