What to consider before buying a commercial property
When a commercial property changes hands, the capital allowances position is frequently agreed as part of the transaction. Understanding what is being agreed, and why, is worth the time before completion.
Why timing matters
Many of the decisions that affect a purchaser's entitlement to capital allowances are taken during the transaction itself. Once completed, some of those decisions are difficult or impossible to revisit. Raising the subject early gives everyone involved time to deal with it properly.
Questions worth asking
- Has the seller claimed capital allowances on the property, and if so on what?
- What information is available about historic expenditure on the building?
- What is proposed in the contract regarding fixtures and their treatment?
- Who is advising each party on the capital allowances position?
None of these questions is difficult in itself, but the answers shape what may be available to the purchaser in future. Where the answers are unclear, a short review before exchange is usually a sensible step.
The best time to think about capital allowances on a purchase is before the price is agreed. The second best time is before exchange.
Working with your advisers
Solicitors and accountants each play a part in a property transaction. A specialist capital allowances adviser complements that work by focusing on the building, the expenditure and the position being agreed. The aim is a clear, documented outcome that the purchaser can rely upon.
This article is general in nature. The appropriate approach will depend on the property, the parties and the transaction. Please seek advice on your own circumstances.
