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Why you should form a company for each property you buy

As my readers know I am a big fan of investments in whole apartment blocks (vs. single units), mainly because its much better value and the investor is steering the wheel (and all involved parties now this).

Nevertheless bad things can happen.

Tip 1:
Form a new company for each property you buy.
This involves higher cost for accounting but, if you change strategy and decide to split and sell the units, this system prevents you from paying commercial tax an all your income within the same company.

The reason is very simple: If you hold income producing property within a asset management company the income is no subject to commercial tax, but if you start trading (aka selling) property than ALL income within the company is a subject of commercial taxation.

My advice as all ways: Get a good, trustworthy and experienced:

  • property manager (at least english speaking or even better your mother tongue)
  • tax accountant (with experience in cross border taxation)
  • civil ingenieur (Dipl. Bau-Ing.)
  • property lawyer
  • property appraiser
  • lead broker
  • As brokers in Berlin tend to just market the property the have under contract (or even worth not under contract) its always a good idea to contract an experienced broker as lead broker to prevent you from the several possible pitfalls.

    What are your experience on investing in Berlin?
    Please send me an email or post a comment below. I would like to hear your thoughts and experience.

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