Buying Commercial Property: What Your Accountant Needs From You

Three piles of paper: yours, the property's, and the deal's

Everything we need sorts into three piles, and each pile answers a different question. Your corporate and personal file answers whether the purchase is affordable and how it should be owned. The property file answers what the building actually earns and costs, which drives both price and financing. The deal file answers how the transaction is structured and what has to happen, in what order, before closing. Here is the full map, with what we build from each pile:

You will not have every item on day one, and that is normal. Send what exists, flag what is coming, and tell us the conditional period deadline, because the timeline decides which questions get answered first.

Pile one: your business, because the buyer gets underwritten too

We start with your side because on most owner-occupied purchases the lender underwrites the business as hard as it underwrites the building. The core of this pile is the last two to three years of corporate financial statements and tax returns for each company in your group, the current interim numbers, a schedule of existing debt with payments and maturity dates, and your real cash position including what is earmarked for the down payment. If your group has more than one corporation, a simple structure chart with ownership percentages saves a week of back-and-forth.

The personal layer matters more than buyers expect. Commercial lenders almost always want a personal net worth statement and your recent notices of assessment, because your guarantee will likely sit behind the mortgage no matter which company takes title. None of this is busywork: from this pile we run the debt service math, whether the cash flow your business reliably produces covers the new mortgage payments, property costs and your existing obligations with a cushion, and that answer sets the realistic price range before you fall in love with a building. If the group's statements are internally prepared, this is also the moment to decide whether the lender will expect compiled or reviewed statements, because upgrading the assurance level takes time you may not have inside a conditional period.

One document owners forget belongs in this pile: your current lease. If the purchase means leaving rented premises, the exit terms matter to the cash plan, how much term remains, what notice is required, whether the lease can be assigned or the space sublet, and what restoration costs the landlord can charge on the way out. Overlapping months of rent and mortgage payments are common in a relocation, and they belong in the projections rather than arriving as a surprise in the first quarter of ownership.

Pile two: the property's own numbers, verified rather than accepted

The property file is where due diligence happens, and the rule is that nothing the seller or listing agent asserts gets used until it is verified. If the building has tenants, we need the rent roll and the actual leases, not a summary, because the leases say who really pays utilities, taxes and maintenance, when each tenancy can end, and whether the income the listing advertises survives contact with the documents. We need two or three years of operating cost history, the property tax bills, and any existing appraisal, building condition or environmental reports, since lenders will require current versions of most of these and ordering them early protects your closing date.

If the building will be owner-occupied, the file is thinner but the analysis is not: instead of a rent roll we model the occupancy cost your business will actually carry, mortgage payments, realty taxes, insurance, utilities and a realistic maintenance reserve, and compare it honestly to your current rent. Either way, the output of this pile is a cash flow model of the building itself, and that model becomes the income side of the lender's underwriting file. Where a vendor resists producing documents, that is information too, and it belongs in your price negotiation while conditions are still open.

Watch the third-party reports for lead time as much as content. Appraisals, environmental site assessments and building condition reports are usually lender conditions, they are ordered from a shortlist the lender accepts, and an environmental assessment that recommends further investigation can add weeks and a second report to the timeline. Ordering early, and negotiating a conditional period long enough for the reports the lender will actually require, protects both your deposit and your closing date. The costs of all of them belong in the closing budget from the first draft.

Pile three: the deal, and the two items that cannot wait

The deal pile is small but it carries the two decisions that must be finished before closing, because neither can be fixed afterward. The pile itself: the agreement of purchase and sale or the draft offer, the source of the deposit, any financing term sheet or lender discussion notes, the target closing date, and, critically, the name of the purchaser on the offer.

The first urgent item is the purchaser entity. The company named on the agreement is the company that owns the building, and changing it later ranges from awkward to expensive, so the ownership question, operating company, holding company, or you personally, should be settled before the offer is signed or, at latest, while the deal is still conditional. The full analysis lives in should my corporation buy commercial property and, for the entity choice specifically, who should own the building: personally, opco or holdco. If you have already signed in the wrong name, tell us immediately; there is sometimes a window to assign the agreement before closing.

The second urgent item is HST. The sale of commercial real property is generally a taxable supply, but when the purchaser is HST-registered, the tax normally does not change hands at closing: the purchaser self-assesses it on its own return and, where the property is for commercial use, claims the offsetting credit in the same filing. That mechanism only works if the entity taking title is registered before closing. Get it wrong and the HST becomes real cash at the closing table, a financing problem no one priced. Confirming the purchaser's registration, or registering the new entity in time, is a standing item on our checklist for exactly this reason.

The deposit deserves its own paper trail. The lender will want to see that the deposit and the down payment are genuine equity and where they came from, so cash moving from the operating company to a new purchaser entity should travel as a documented intercompany dividend or loan, not as an unexplained transfer that has to be reconstructed at year-end. If part of the equity is coming from you personally, decide now whether it goes in as a shareholder loan or share capital, because that choice affects how the money comes back out later, and it is far easier to paper correctly in the week it moves.

What we build from the file: projections, the lender package and the closing budget

The finished product is three documents, and they are what a business financing and projections CPA in Ontario is actually for. First, financial projections: the business and the building together, showing the lender that earnings cover the proposed debt service with a margin, stress-tested for a slower year and a higher renewal rate. Second, the financing package: statements at the right assurance level, the projections, the property's verified income file and the structure of borrower, covenants and guarantees, assembled the way a credit committee expects to read it. The choice of borrowing entity interacts with the lender's requirements in ways that can change your structure, which is covered in how financing affects commercial property ownership structure.

Third, the closing budget, because the purchase price is not the cash you need. The budget lines up the down payment, Ontario land transfer tax (plus Toronto's municipal tax if the property is there), legal fees, appraisal, inspection and environmental costs, lender fees, insurance, and the HST treatment, against where each dollar is coming from and when it has to land. After closing, the same file keeps working: most commercial mortgages carry ongoing lender reporting, annual statements and sometimes covenant calculations, and building that into your year-end routine from day one is far easier than reconstructing it at the first request. Our financing support covers the package; the reporting rhythm afterward is standard work inside an ongoing engagement.

There is also a small stack of setup work in the weeks after closing that is much easier when the file above already exists: recording the purchase properly with the price split between land and building, setting up the capital cost allowance schedules, booking the closing costs correctly between what is deductible and what is added to the property's cost, and, where a holdco or property company bought the building, putting the lease with the operating company in writing and starting the HST cycle on the rent. None of it is difficult; all of it is easier done once, correctly, than unwound at the first year-end.

What changes the checklist, and when to send it

Four facts stretch or shrink this checklist:

• Tenanted or owner-occupied. Tenants add leases, rent rolls and a landlord operation to diligence; owner-occupation adds your own occupancy cost model and makes your business's covenant the heart of the file.
• How your group is structured today. An existing holdco makes the entity decision faster; a single operating company may mean incorporating and registering a new purchaser inside the conditional window.
• The state of your statements. Lender-ready statements shorten everything; internally prepared numbers may need upgrading before underwriting can start.
• The conditional period. A generous conditions clause buys time to verify and structure; a short one means the file above must arrive on day one, complete.

The best time to send the file is before the offer, when the purchaser entity can still be chosen freely and the affordability answer can still shape the price. The second-best time is the first day of conditions. A free 15-minute discovery call is enough to tell you which items on this list are urgent in your deal and which can follow, and to put a defined scope and fee on the work in writing.