As a landlord you should already be familiar with the planned tax changes that are being gradually introduced between this year and 2020 and you might rightly be thinking about your options.
You may be aware that in some situations it can be more tax efficient to transfer your property or properties into a limited company (since you would potentially only pay corporation tax at 20% depending on how much money you took out of the company). But have you considered mixed-use such as a shop with a flat or two above?
Many investors have begun eyeing up mixed use premises as potential alternatives to residential buy to let and the reason for this is quite simply that such properties are exempt from the new tax rules meaning that there is potential to realise a larger margin – if you play your cards right.
Mixed use property incurs commercial property stamp duty rather than the now hefty residential buy to let stamp duty and if you already own residential property it might not be a bad idea to diversify your portfolio. In addition you can also claim tax relief for expenses incurred – including mortgage rate interest relief.
There are further advantage too – commercial tenants typically pick up the costs of maintenance and insurance and the leases tend to be longer meaning there is potentially less turnover of tenants. However you should also consider that void periods tend to longer and depending on where and what your commercial or mixed use premises is, you can be subject to the vagaries of the high street and local business environment.
Whilst not a panacea for the changing market place, it may well be worth keeping the idea of mixed use on your radar and keeping an eye out for opportunities that make good sense for your personal situation.