Here’s what you need to know before purchasing an office space

When you think of investment opportunities, you think of residential properties. But did you know that office spaces are great assets that command greater yield and more stability?

Here’s what you need to know if you’d like to someday be a commercial landlord.

How much should I invest in an office space?
There is no cap. This is depending on your preference and your financial capability.

What’s the capital needed to purchase an office space?
This is subject to two factors:
#1 Property price
#2 Your financial capability

Bear in mind that to buy an office space, you’d have to commit to a 20% down payment, regardless if you are buying as an individual or as a company.

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What are the requirements?
If you’re buying as a business, the organisation has to run for a minimum of 2 years with audited accounts.

As for Sole Proprietorship, many individuals make the mistake of not having their accounts audited. The problem with this is, when you apply for a loan, it is very likely it won’t get approved.

If you’re buying an office space as an individual, what you will need is 3-months pay slip, EPF statement from the last one year. However, if you do not have any of the above, you can instead submit your latest Borang B LHDN filing and you EA form.

What about GST?
If you’re buying a brand new commercial space off a developer, you will be charged 6% GST.

As for second hand office space, here’s the low down:

–   Buying as an individual from an individual, no GST surcharge.

–   Buying as a company from an individual, no GST surcharge.

–   Buying as a company from a company, there will be a 6% GST surcharge.

–   Buying as an individual from a company, there will be a 6% GST surcharge.

Tip: It would be wise to purchase as a GST registered company, because the company will be eligible to claim GST paid for commercial purposes. You will be entitled to claim the paid GST if you buy the property as an individual.

Who can own/buy a commercial property?
Anyone who has the financial capacity.

Who manages the property after purchase?

You as the owner, even after leasing out.

What’s the ROI compared to residential property?
Yield for residential property is 6.4% while commercial is 8.1%. This calculation is based on median sold prices and median rent in the market.

How is it different from investing in residential property?
Better returns as the yield is higher.

Are there tax deductions when you own a commercial property versus owning a residential property?
There are no tax deductions when you own a commercial property.

If you’re looking for an office space, look no further. KL Eco City is a world class city within a city! Located at the epicentre of the brand new Golden Triangle, enjoy easy access to KL Sentral, Bangsar, Damansara City, Pantai and Mid Valley City.

 

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