Do commercial or mixed use property suffer the same tax treatment as residential?

The buy-to-let market has been subject to significant tax changes over recent years.  Existing landlords and those thinking of entering the industry have suffered the introduction of the 3% stamp duty surcharge on second homes and residential investment properties. Coupled with the stress and affordability test which came into force in January 2017, buy-to-let tax relief changes which were implemented in April 2017 are forcing investors to consider their options. If you need advice on what options are available to you and your business, our CHW Accountants in Bolton can help.

As the surcharge applies only to residential property, investors have increasingly been looking into investing in commercial/ semi-commercial (mixed use) property.

Both commercial and mixed use properties are exempt from the 3% surcharge – e.g. flats above shops, may avoid the levy.

Some investors have bought commercial property, thereby avoiding the surcharge, with a view to obtaining planning permission to convert the property for residential use.  This has the potential to prove a cost-effective way of obtaining a residential property, but investors needs to be comfortable with the fact that if planning permission isn’t granted they could end up with a commercial investment.

Investors in mixed use properties will be affected less by the mortgage tax relief changes which hit landlords of residential properties in April 2017. However, these changes don’t apply to commercial/ mixed use properties, the commercial part of the property will be exempt from the changes.  Essentially, you’ll still be able to claim tax relief for loan finance costs relating to the commercial part. Care should be taken in apportioning loan finance costs between commercial and residential parts of a development as the legislation governing this is somewhat opaque.

For more help with finances, contact our Accountants in Bolton on 01204 531 031 or via our enquiry form.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

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