Your Practice can thrive in a particular location as you, your partners and your team become known for quality services. As a result you could be working out of the ideal premises for your present and future growth or that premises may be ideally located nearby.
Purchasing your own premises can be a wise business and investment decision but it needs to be structured correctly so you and your partners take account of personal wealth protection, income tax considerations and capital gains tax considerations.
Firstly do not buy your premises in the same name that your business runs from. You as a professional in allied health will have yourselves covered for professional indemnity insurance for your services, however we live in a litigious society and there are a number of ways that your livelihood and assets can be threatened when you’re in business. Your business premises will grow in value as the years go by and you do not want this increase in value to be at risk…it needs to be protected.
For Income Tax purposes a simple structure that will allow you to claim all the expenses related to the premises and then distribute any excess rental income to individual family structures is the best way to deal with the income tax that will be attributable to the business premises.
Finally, the structure to house the business premises needs to be setup so that it will legally minimise the potential Capital Gains Tax in the future sale of the premises. A Unit Trust or Partnership of Family Trusts are the two favoured structures to hold an allied health business premises on behalf of two or more business Partners. Trusts get Capital Gains Tax advantages that companies don’t, so please DO NOT buy your premises in a trading Company Structure. If you receive advice to the contrary, then please talk to Pat and he will offer you the correct advice here.
If business Partners (including their personal Partners), have significant Superannuation then those funds can be used to hold the Equity in the business premises. To involve your Superannuation in purchasing the business premises is usually the most tax effective way of holding this property. There are a number of brilliant structuring tricks and tips that Paris Financial can advise on in this area, so please ask us how.
At Paris Financial we will structure and advise on your business premises to maximise all the key asset protection and tax minimisation strategies and all the while understanding your wants and needs not just as consulting professionals yourselves but as long term investors who want to use their own piece of business real estate to drive up retirement savings.