The Benefits of Commercial Property Investment

December 28, 2009
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 Four Benefits of Investment in Commercial Property

Ever wonder if there are benefits in commercial property investment?

One should determine that something can be done – Abraham Lincoln.

It is true that commercial property investment is different from residential property investment - but certainly not as complex as commonly perceived.

Here are the benefits in greater details.

Increase return on investment by maximum usage

There are many ways you can maximize usage of your commercial property - especially with shop-offices - to generate more rental income and increase your return on investment.

Higher rental returns in terms of quantum and frequency

By investing in the shop-office, we only need to collect rent from one tenant instead of from four different tenants even if condominiums are side by side in the same location. So, based on economies of scale, it is easier to own and manage one commercial property as opposed to four residential properties.

Easier qualification for business income

In certain countries, one may declare one’s rental income as “business income”, provided that one has met the quantitative and qualitative measures set out by the authority.

The advantage of qualifying one’s rental income as business income primarily is that the administrative expense incurred in managing your investment property can be deducted from your rental income - resulting in a reduction of your taxable income.

An example of administrative expenses are the rental of premise for the operation of the business, staff salaries, travelling expenses, telephone and utility charges, etc. which can be deducted from your rental income as expense.