Commercial property tax exemption is a topic that often confuses property owners and investors. Let’s unpack the details to help you understand when and how commercial properties might be exempt from certain taxes.
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Is commercial property tax exempt?
Commercial properties are not automatically exempt from taxes. However, there are specific situations where tax exemptions or reliefs may apply.
Tax rules for commercial properties can be tricky. Here’s a breakdown of the main taxes and potential exemptions:
Business Rates
Business rates are a form of local tax on non-domestic properties. Most commercial properties are subject to business rates, but there are exceptions:
• Farm buildings and land used for agriculture
• Fish farms
• Places of public religious worship
• Buildings used for training or welfare of disabled people
Some properties may qualify for business rates relief, which can reduce the tax burden:
- Small Business Rate Relief
- Rural Rate Relief
- Charitable Rate Relief
- Enterprise Zone Relief
VAT on Commercial Property
The sale or lease of commercial property is usually VAT-exempt. This means:
• No VAT is charged on the sale or rent
• The seller or landlord can’t reclaim VAT on related costs
However, a property owner can opt to tax the property, making it subject to VAT. This allows them to reclaim VAT on expenses but means they must charge VAT on rent or sale.
Capital Gains Tax (CGT)
When selling a commercial property, CGT may be due on the profit. However, there are ways to reduce or defer CGT:
• Business Asset Disposal Relief: Pay 10% CGT instead of 20%
• Roll-over Relief: Defer CGT by reinvesting in new business assets
• Hold-over Relief: Pass on business assets without paying CGT
How can I avoid capital gains tax on commercial property?
While you can’t completely avoid CGT, you can reduce it by:
- Using your annual CGT allowance
- Claiming available reliefs
- Offsetting losses from other asset sales
- Transferring part ownership to a spouse or civil partner
Stamp Duty Land Tax (SDLT)
SDLT is payable when purchasing commercial property. The rates are:
Property value | SDLT rate |
---|---|
Up to £150,000 | 0% |
£150,001 to £250,000 | 2% |
Over £250,000 | 5% |
Some SDLT reliefs are available for specific situations, such as:
• Charities buying property for charitable use
• Companies transferring property between group members
• Purchases of multiple dwellings
Do you pay stamp duty on commercial property?
Yes, stamp duty is payable on commercial property purchases, but the rates differ from residential property SDLT.
Income Tax or Corporation Tax
If you earn rental income from a commercial property, you’ll need to pay either:
• Income Tax (for individuals)
• Corporation Tax (for companies)
There’s no blanket exemption, but you can deduct allowable expenses to reduce your tax bill.
Tips for commercial property owners:
- Keep detailed records of all property-related expenses
- Review your tax position regularly with a qualified accountant
- Consider the long-term tax implications before opting to tax a property for VAT
- Explore available reliefs and exemptions for each type of tax
- Plan ahead for potential CGT when selling a property
Understanding the tax landscape for commercial property can help you make informed decisions and potentially save money. Always seek professional advice for your specific situation, as tax laws can change and individual circumstances vary.
Why Choose Property Saviour for Your Commercial Property Sale?
At Property Saviour, we understand that selling a commercial property can be a daunting task. That’s why we’ve made it our mission to provide a straightforward, hassle-free solution for property owners looking to sell quickly and efficiently. As a team of experienced cash buyers, we’re committed to making the process as smooth as possible for you.
We pride ourselves on our ability to complete transactions swiftly, often within just three weeks. Unlike traditional methods, we don’t rely on estate agents, surveys, or bank loans. This means no unexpected delays, no last-minute price reductions, and no risk of buyers pulling out at the eleventh hour. When we agree on a price, that’s the price you’ll get – guaranteed.
If you’re facing challenges with your commercial property, whether it’s problematic tenants, mounting repair costs, or simply a desire to liquidate your asset quickly, we’re here to help. Why not give us a call today? Our friendly team is ready to provide you with a free, no-obligation cash offer. We’ll even contribute up to £1,500 towards your legal fees. Don’t let your commercial property become a burden – let Property Saviour turn it into an opportunity for a fresh start.
Sell with certainty & speed
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.