Whether you lease or purchase your office space, it represents a major financial investment, and there are pros and cons to each. If you haven’t yet decided which move is right for you, here are some issues to consider.
The Benefits of Leasing
If you haven’t yet found the perfect property to purchase, or aren’t ready to make a purchasing commitment, leasing offers a number of benefits. Here are four to consider.
- There’s no down payment. When you purchase property you will need to put down a large payment, anywhere from 10 to 30 percent. But when you lease, you will only have to pay a deposit that typically equals one month’s rent, and, if you use one, a one-time broker fee. If you hire an attorney for negotiations, you should expect to pay for two to four hours of the attorney’s time. Leasing allows you to use your remaining available cash for working capital or expansion.
- You can deduct your lease payments. When you lease commercial property, you will be able to deduct your lease payments, as well as other rental expenses, on your taxes.
- The landlord should be responsible for repairs and maintenance. Depending on how you negotiate your lease, the landlord may agree to pay for maintenance expenses, repairs, and improvements. You will likely be responsible for keeping the carpets and interior space clean, but the landlord will be responsible for keeping the building in good repair. Be sure your lease specifies who is responsible for what.
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