Commercial Mortgages: Property Ownership and Leaseback
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Commercial Mortgages: Property Ownership and Leaseback
There are a number of options for the ownership of a business property, with various advantages, depending on the type of company and the circumstances of the individual.
One example of this could be for a company to raise money through a commercial property leaseback. This is sometimes referred to as a sale and leaseback or a purchase leaseback. The company can sell its commercial property and then immediately lease it from the new owner.
There are various benefits in doing this kind of transaction, both for the company and for the buyer. The company is able to free capital from the property while continuing to have use of it. The deal may be set up to allow the company to extend the lease at the end of the term at an agreed rate for example or even to buy the property back in the future.
The disadvantage of this is that while the company improves cash-flow by accessing the funds straight away, there will no longer be the potential benefit of future capital growth. Other assets such as company vehicles can also be used to generate revenue using leaseback.
There may also be advantages in purchasing the premises as an individual and leasing it to the company (usually only in the case of a sole trader or partnership), rather than owning it through the company. When the property is sold, depending on how long it has been owned, there may be special treatment for capital gains tax through business asset taper relief.
Another alternative could be to hold the property within a pension scheme which is becoming a popular choice with commercial buildings as there may be tax advantages here. Click here for more details
To talk to one of our experts about the best option for property ownership for your company, please complete a Mortgage Enquiry Form and we will arrange for a specialist adviser to contact you. Alternatively, you can call us on 0845 108 0505.
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