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  • Tax

    Commercial or residential

    Hi all,

    I should.... know the answer to this but I thought I'd run it past the trusted wise heads on here.... How would a residential multi unit property be treated under the section 24 rules if the whole is let on a commercial 10 year FRI lease?

    I would imagine for funding, it would come under the banner of commercial, on that basis, would I be correct in thinking that it should be treated in the same way for section 24??

    Thanks in anticipation.

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    Firstly its a common mistake to assume that because the mortgage or property market consider something as commercial that the tax rules follow the same rules they don't.

    S24 refers to "dwelling-related loan" which is defined as "in relation to a property business, [a dwelling rated loan] means so much of an amount borrowed for purposes of the business as is referable (on a just and reasonable apportionment) to so much of the business as is carried on for the purpose of generating income from—

    (a)land consisting of a dwelling-house or part of a dwelling-house, or

    (b)an estate, interest or right in or over land within paragraph (a),.."

    In short it does not cover commercial property but from what you've said it means you need to ascertain what proportion of your property business would not be residential.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022