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Ray
Ray, Lawyer
Category: Real Estate Law
Satisfied Customers: 37069
Experience:  Texas Attorney for 30 years dealing in real estate
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I do have another question, about a property that I am looking

Customer Question

I do have another question, about a property that I am looking to buy. I live downtown and it is an area that is revitalizing. The property I am looking at used to commercial, but a lady bought it about 8 years ago and turned it into a loft. There is a large space that is in the front of the loft that could be used for office/commercial.She is selling it as a residence. So, my questions are 1) Is there a way to buy the spaces separately so that I can pay for the front space as commercial, (and let my business buy it) and buy the back space as my residence? 2)Or would I buy the entire space and then can I turn the front space into a commercial office/retail space? The front room and the bedroom currently share a bathroom..would I have to build a second bathroom fort the commercial space? Also, the city usually requires that a commercial space have a back exit, and this place does not. 3) Or would it be best to just use it as office space and take it as a tax write off? And the plot thickens...I should be getting a settlement from the BP oil spill for my business. Because it is considered replacement lost pay, I will have to pay taxes if I just wrote a check to myself. My accountant has suggested that I spend it on business expenses so that I do not have to take it as income. So, since this front space WILL be office, how can I apply this money to the buy as going toward an office. The front and the residence also share an entrance, would this be a problem? Thanks again for your help! Julie
Submitted: 7 months ago.
Category: Real Estate Law
Expert:  Ray replied 7 months ago.
Hi and welcome to JA. Ray here to help you today. Let's go through these. 1) Is there a way to buy the spaces separately so that I can pay for the front space as commercial, (and let my business buy it) and buy the back space as my residence? You can do so you need to check the city zoning for the space to make sure it is dual here residential and commercial.This could be done with two separate sales contracts one of business, one for residence. 2)Or would I buy the entire space and then can I turn the front space into a commercial office/retail space? The front room and the bedroom currently share a bathroom..would I have to build a second bathroom fort the commercial space? Also, the city usually requires that a commercial space have a back exit, and this place does not.Again first step is to check zoning and also with city hall to see what would be required for you to split it such as back entrance.This you would know your limits or what would need to be modified here. 3) Or would it be best to just use it as office space and take it as a tax write off?If you buy it a a business you can write it all off.And honestly if you are sleeping there likely no one notices.Check for zoning issues here too before you buy it. And the plot thickens...I should be getting a settlement from the BP oil spill for my business. Because it is considered replacement lost pay, I will have to pay taxes if I just wrote a check to myself. My accountant has suggested that I spend it on business expenses so that I do not have to take it as income. You likely have to report this as income , you could write off any business deductions you have so it may be a wash here. Check with city zoning to see what you can do and if it needs modification like a rear entrance to split this into business and residential.I am sure it is possible but you may have to add an entrance I appreciate the chance to help you today.I wish you the best with purchase.I would defer to your accountant on how best to lower the taxes here.

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