Renting Equipped Offices: Advantages and Disadvantages

Renting Equipped Offices: Advantages and Disadvantages

There are several alternatives to develop your market. Investing in commercial premises or offices is an essential real estate investment in taxation. Opting for office renting will give you many advantages. However, it also has some significant disadvantages.

The Advantages of Renting Equipped Offices

With a rental yield reaching 7 to 8%, the rental of equipped offices represents a real tax opportunity for the lessor(s). They must join together in a Collective Name Company or SNC to gain profit. Indeed, the SNC can :

  • choose to spread the transfer costs over 5 years or to deduct them in full in the first year;
  • deduct the totality of the interests, contrary to the system of the land incomes in which the part of the interests taking part in the realization of the deficit can be carried forward on the 10 following exercises;
  • depreciate the price of the premises excluding the land, representing approximately 20% of the cost of the entire land. As a result, the taxable income will be reduced by about 8,000 euros per year, knowing that the depreciation rate approximates the 5% of this price.
  • In case of deficit, the totality of the share of the associates must be attributed on the global income and without ceiling.

The tenant or the operator can immediately work since the premises are already equipped or fitted out. Indeed, his office is equipped with the material and furniture necessary for exercising his activity(ies), such as armchairs, telephone or computer equipment, cupboards, and other “furniture”. He can also manage his schedule as he is his own boss. Also, he can:

  • organize his work as he wishes;
  • arrange his premises in his own way;
  • receive appointments and calls in his office without having to lower his voice or ask permission from his colleagues.

Renting an equipped office can be an excellent asset for both the lessor and the lessee.

Office, Sitting Room, Executive, Business, Desk

The Disadvantages of Renting a Serviced Office

Even if renting a serviced office is a practical and flexible solution, it is also expensive. In addition to the monthly rent, you have to pay the security deposit and the bank guarantee as soon as you start your activity.

In the Paris region, the financial cost of entering the premises represents up to 9 months of rent and is divided into:

  • 3 months of security deposit ;
  • 3 months of agency commission;
  • 3 months of advance rent.
  • The first prices are then at 350 euros per month. Such an investment could be a “waste of money” for a young company with a relatively large financial capacity.

When renting an equipped office, one is necessarily bound or committed to a certain period because of the 3, 6, and 9 months lease. Moreover, one is supposed to make the same journey, to stay in the same place every day, because the place of work is fixed. But the most significant risk in renting an office is the fact of not having your lease renewed. Thus, one is forced to leave the premises. There will be less freedom.

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