When we think of real estate, it is normal for us to imagine the dream of owning a home. However, acquiring a property can also help you achieve another objective, this time, professional: the desire to undertake. Therefore, it is important to understand the differences between commercial or residential properties.

In 2017, a study carried out with the support of Sebrae showed that four out of ten Brazilians were already undertaking or working to get their company off the ground.

However, is it a good idea to undertake at home? Is it necessary to invest in the purchase of a second property? Can you finance a commercial property?

There are a lot of questions, isn’t it? But do not worry. In this article, we will cover the differences between these two purchasing modalities. Come on?

What are the advantages of buying a property?

Before we talk specifically about the differences between commercial or residential properties, let’s understand if it really is advantageous to own a property. Why not rent, for example?

Renting is an advantageous initiative for those people who are unsure whether they want to stay at a particular address. For example, a professional who moved to a new city for work, but does not know if he will remain in the company, should not buy a property to live close to that company.

In that case, it may be more interesting to be a tenant. Over the months and seeing his professional goals more clearly, he may decide to buy a house or apartment in that municipality – or move out, if he wants to try new airs.

However, in other cases, the purchase still proves to be advantageous – either for commercial or residential properties. Firstly, the monthly fees for financing are similar to those for rent, and may even be lower, depending on the characteristics of the negotiation.

In addition, upon becoming a property owner, the resident or business owner will be able to sell or rent it, turning it into capital, if necessary.

What are the characteristics of a residential property?

The residential property can be presented in a multitude of models of houses and apartments. However, your purpose should be housing.

Therefore, it must contain the necessary structure to provide the resident with the possibility of eating, resting, socializing, access to the bathroom, etc.

For tax purposes, the IRS defines a residential property as:

(…) Unit built in an urban or rural area for residential purposes, according to the disciplinary rules of the buildings in the locality in which it is located.

It is important to be aware of these definitions, as commercial or residential properties need to be declared according to their purpose of use.

What are the characteristics of a commercial property?

The commercial property is a property whose purpose is to assist the owner or tenant in their business activities, offering a structure so that these actions can be carried out. Therefore, the commercial property cannot be rented by individuals, only by Legal Entities.

Not all commercial property can be used for the same purposes. The entrepreneur needs to be aware of the rules established by Organs regulatory bodies, some of them specific to the model of his business.

Therefore, before buying a property, check with the city hall of your city what are the requirements to open a company. This will help you decide which model of the property to buy.

It is possible to buy a residential property and turn it into a commercial property, but this requires the owner to inform the city about this change since the IPTU charge and the property registration will have to be changed.

What are the main differences between them?

In addition to the purpose of use, we can highlight the difference between the rules for leasing and access to credit for a purchase. To buy a residential property, many people resort to financing from the Financial Housing System (SFH).

Through SFH, it is possible to finance properties that cost up to R $ 1.5 million and are in the same location where the owner works. It is possible to use FGTS resources in the purchase, including to amortize the debt during the contract. However, the property purchased must be for residential use – and the person’s first property in that city.

Thus, if a person wants to buy a commercial property to be the headquarters of his company, he can resort to the Real Estate Financial System (SFI). In this case, there is no maximum ceiling for the purchase and no limit on properties purchased in the same city. However, the buyer will have a higher interest expense, as SFI is more expensive than SFH. The use of FGTS is not permitted in this case.

There are other ways to raise capital for the purchase of a commercial property, such as resorting to business development agencies or business credit. In these two modalities, it is essential that the entrepreneur proves that the purchase respects the company’s financial planning – and that it will not represent a risk to the partners.

Another difference between commercial and residential properties is in the rental process. As this subject is very extensive, we will not analyze in-depth what the law says, in all its paragraphs. We will only emphasize that the commercial lease agreement tends to bring more protection to the lessee, preventing the owner from putting a venture at risk by requiring, without adequate notice, the end of the contract.

This care is essential because the choice of a commercial point is part of a company’s marketing strategies. If the business has no guarantees that it will be able to carry out its activities fully at the address, this may make it unfeasible.

If you are going to purchase commercial or residential properties, it is important to check the impact of that purchase on personal or business finances. Do not forget to do good market research to choose the best property possible, in addition to conducting credit simulations, in search of the best mortgage rates.  Planning is essential in both cases.

CrediPronto can help you in this mission. We are a company with great expertise in the real estate market. Prioritizing agility, our contracts are usually released in just ten days.  Talk to our team, it will be a pleasure to help you.