Advice for property investors on commercial buildings

Chris Street

9th October 2016

Advice from Optimise Accountants on property tax

Advising on property tax means dealing with more than residential property – the expert team of property tax specialists at Optimise Accountants also advise clients on matters relating to commercial property.

In fact, more and more residential property investors have been establishing profitable additions to their property portfolios in the last couple of years, by adding commercial properties into the mix.

But one of the main considerations – whether the property portfolio is residential, commercial, or a combination of both, will always be how to reduce property tax. This is where my team come in.

Reduce property tax

I’ve read with great interest the rules and regulations surrounding VAT for property investors on commercial property, and it’s worth outlining these changes here, so that my property investment blog readers can update their own property portfolios if tax compliance changes are required.

A significant change has come in the HMRC’s VAT Notice 742, relating to land and property – read it in full here.

As a property investor dealing with commercial buildings, it’s also worthwhile to review this HMRC document as well, concerning dis-apply the taxation of a commercial building purchased for the development of residential dwellings.

You could inadvertently pay VAT on a commercial property because they do not mention it within the advertisement. Some sellers assume that another business will simply reclaim the VAT. However, as most property investors will know that we cannot reclaim VAT in most cases. That is why you need to read the small print. If VAT is being charged there are instances when you can ask the seller using specific forms within HMRC’s own website to dis-apply VAT.


Profitable investing

A property investor can only include VAT if they are charging for additional services, such as property management, on top. As such they will not be able to claim back VAT on purchases made.

It can be a confusing and complex area – so ensure that you’re fully informed of your property tax liabilities as a residential or commercial property investor.

Registering for VAT

For further information on the rules and regulations around registering for VAT, please visit here.

If you want to understand how to implement this strategy or to discuss other finance/tax questions then please book some time with me or one of my team, using the below calendar.

Please use the redeem code “Article 33” to get 33% off your next consultation call.


Book a call to see how we can help you.