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Where Taxpayers and Advisers Meet

Is a HMO a commercial property?

AT
Posts:8
Joined:Wed Aug 06, 2008 3:23 pm
Is a HMO a commercial property?

Postby AT » Tue Oct 23, 2018 8:57 pm

All

Can anyone shed any light on whether a HMO which has been previously converted from a residential property would be considered to be a commercial property or a residential property? It seems to me that the tax treatment of mortgage interest relief for those who run a HMO on an individual basis and not under a corporate structure appears to be a gray area. According to the HMRC Property Income Manual the mortgage interest restrictions do not apply to commerical properties. Given that HMO’s are valued as a commercial property and any mortgage secured against its purchase is a business mortgage and not a standard BTL mortgage, it seems that it is possible MI suffered in the servicing of a loan for a HMO should be fully deductible and thereby not subject to the restriction on MIR. Also, the HMRC PIM specifically excludes furnished holiday lets. Is it the case that a HMO premises is therefore a hybrid of a dwelling house and what might be considered a commercial property? I accept that there are material differences between a commercial property and a HMO in that a commercial property is likely to be let under a long lease agreement, and a HMO is let on a set of individual AST’s which are short term in nature.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Is a HMO a commercial property?

Postby bd6759 » Tue Oct 23, 2018 11:09 pm

An HMO is a residential property. It is a dwelling.

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Is a HMO a commercial property?

Postby AdamS93 » Wed Oct 24, 2018 7:28 am

100% a residential property. No grey area.


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