Luxury Homes for Personal and Business Use: What Buyers Need to Know
By Tina Martin
Luxury home buyers want a house that can do it all ‑ custom craftsmanship, functional living, and world-class recreation out their back door. In addition to a picturesque place to live and play, many of today's luxury buyers are also searching for a home where they can run a business.
Buying property for personal and business use can be complicated, however. From zoning to taxes, there are a lot of financial considerations when combining home and business. Whether you're buying property in the heart of the city or picturesque North Idaho's Black Rock, here's what you need to know before buying a luxury home for business use.
Choosing the Right Location for a Home-Based Business
Home-based business owners have the flexibility to work anywhere, but location is still an important factor when buying property. Entrepreneurs must ensure their business complies with local zoning ordinances and homeowner's associations, particularly if a business requires signage, draws traffic, or otherwise compromises the safety and character of a neighborhood. Before investing in property, it's crucial to familiarize yourself with local rules so your business doesn't get fined or shut down for non-compliance.
Financing a Home-Based Business
Getting financing for a new business is challenging, especially for home-based businesses which tend to have few assets to serve as collateral. However, there are a few lending options that can help get home-based businesses off the ground. These include Small Business Administration Micro-loans, invoice financing, purchase order financing, and business credit cards. Home-based businesses can also take advantage of lending programs designed to support struggling businesses through the COVID-19 pandemic. Along with government resources like SBA Express Bridge Loans, a number of companies have offered grants to small businesses during the pandemic.
Financing Your Home Purchase
In addition to financing the business, entrepreneurs also need a plan for financing their home purchase. Some home-based entrepreneurs purchase property through their business in order to ensure privacy in public records. However, buying a home under a business not only affects taxes, it also leaves the property exposed to business liabilities.
Instead of buying property under your business, take advantage of tax deductions for the parts of your home used for business. Just be prepared to prove your creditworthiness to mortgage lenders, who have stricter documentation requirements for self-employed home buyers.
Protecting Your Home-Based Business
Most homeowner's insurance policies don't cover business liabilities, even if that business is located at home. That's why it's so important to purchase a business insurance policy in addition to homeowner's insurance.
Home-based businesses with minimal liabilities can opt for an endorsement on an existing homeowner’s policy. However, an in-home business policy or business owner's policy offers greater liability and property coverage and is a smart purchase for any home-based business that manufactures goods or meets clients in-house. Home-based business owners can also opt for insurance coverage that protects their business in the event of a data breach, employment practices claim, or death of a key employee.
Are You Ready to Buy a Home?
With this knowledge under your belt, you're ready to start searching for your new home and business. As you prepare to buy a house, get your finances in order by checking your credit score, setting a home buying budget, and getting pre-approved for a mortgage. With these steps out of the way, you'll be ready to hire a real estate agent and start searching for your luxury home.
Do you need help finding the ideal property for your home-based business? Let Realtor Greg Rowley and the team at Luxury Homes North Idaho assist you in buying an estate that offers the flexibility and functionality your business needs without sacrificing a luxury lifestyle. Whether you're searching for waterfront property, expansive acreage, or maintenance-free living, the ideal home is out there waiting for you. Contact Greg Rowley at Luxury Homes North Idaho today at 208-659-6527 to find your North Idaho dream home.