Buying Commercial Property | The case

Looking for a property

Every real estate agent is willing to assist you in your search for the perfect place. Against an appropriate commission of course. On average, the commission is around 1.63% of the purchase price (excluding VAT). You can save a lot of money by looking for a room yourself. This is easily done through websites like Funda in business or Marktplaats, especially if you are looking for a place where the competition is not too great.

If there are several private individuals on the coast, it can still be smart to use a broker. He receives the offer a little earlier than it appears on a website. You can also hire a broker for some of his services, for example only for negotiations, making a purchase plan or valuations. You only pay for the service provided.

Are you looking for financing for commercial real estate? Ask about your options non-binding.

Look in the land register

Before entering into the purchase agreement, it is wise to first consult the land registry. You can check if the seller is actually the owner using the ‘cadastral property report’. The cadastral report also contains information on location, surface, purchase price and year of purchase for the land. The cadastral report is public. For a small fee, you will immediately receive an overview of the desired data.

Soil research

In order not to be exposed to unpleasant surprises and be held responsible later, you can conduct an investigation into the treatment of asbestos materials and of soil contamination. Include any right to soil survey in the purchase agreement. Include a state of dissolution in case the soil survey is negative. Some municipalities require a clean land certificate for new construction or expansion on an existing plot.

The purchase agreement

Be careful with promises when visiting a property that appeals to you. Unlike the purchase of a home, the oral purchase agreement applies to the purchase of commercial space. The sale is officially closed if your offer has been accepted.

You have to pay VAT on a new building – up to and including two years old. Purchasing a property that has been taken into use more than two years ago is VAT-free.

Together with the seller, you can decide to pay VAT on the purchase and benefit from the deduction of input VAT. The condition is that you use the property for at least 90% for taxed business purposes. This applies to the year in which you buy the property and for the following financial year. For a number of sectors, entrepreneurs only need to use the business premises up to 70% for VAT-covered services:

  • Real estate business, including mortgage and insurance delivery
  • The travel agency industry, including insurance brokerage services
  • Legally independent health and safety services
  • Employers’ organizations

Have your accountant or broker assess whether it is wise to charge VAT. The buyer and seller must no longer submit a joint formal request to the inspector if the delivery with VAT is registered in a notarial deed.

Taxable sale is not possible if the sale of the property is part of the sale of the entire company, or the seller falls under the agricultural scheme.

transfer fee

When purchasing business space, an 8% transfer fee must be paid. This is not deductible as an expense for the business. You can add the transfer fee to the value of the business space and write it off. If VAT is used, an exemption can sometimes be applied for.

If you are the principal shareholder in a BV, you have the following choices: do you finance the new business premises with money from your BV or privately? In one case, the BV becomes the owner of the property, and in the other case, you become the private owner. Think carefully about the choice, because it has financial and tax consequences. In many cases, it is more advantageous for the BV to finance the business premises. Ask your tax advisor or accountant for advice.

Investment deduction

Buying commercial space is an investment. If you buy a property in which you establish your business, you are also entitled to an investment deduction.

NB: you are never entitled to an investment deduction for the reason the property stands on. You must therefore calculate the value of the property and the value of the land separately. Here you can see the amount you can use the investment deduction up to »

If you include the property as part of your business assets, you must also add the purchase cost to the purchase price for the valuation of the business area on your company’s balance sheet. The purchase costs, notary costs and brokerage costs can be booked directly in the costs. You must activate the transfer tax on the balance sheet and write it off.

Lives and works in the same building

There are different tax options if you live and work in the same building. It depends on whether one can make a clear architectural separation between residential and commercial space. It is mainly checked whether both parts have their own entrance. Depending on your situation, all sorts of scenarios are possible.

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