Commercial property - some questions

[NorthDevon66]

I've noticed many commercial properties for auction have 'VAT is applicable on this lot'.

Does this mean that I would have to pay an additional 20% on top of the hammer price?

Why do some properties have no VAT payable. Is it a sensible idea to only look for ones without any VAT?

What are the implications of paying VAT - assuming I just want to rent out the property to a tenant (and not run my own business) - are there any benefits?

Is the rental income taxed normally (i.e. according to the usual income tax bands)? Are there any ways to reduce the tax amount - eg can I offset against a mortgage.

What roughly are mortgage rates for commercial property?

When selling commercial property does capital gains tax have to be paid? What if the proceeds are used to buy another commercial property?

What about inheritance tax?

[surveyor]

Property is generally exempt from VAT.

However owners can elect to waiver their exemption.

Benefits are usually on costs of build or refurbishment when owner can claim back the vat. Downside is that you have to charge VAT on rents. To some tenants this is not an issue. Not all can reclaim VAT though.

I believe once wavered that is your lot.

It always pays to take expert advice on this angle, from experienced accountants.

[Jockman]

We own our Commercial property through our SIPPs.

AFAIK no tax on rent, no tax on capital gain, no tax on inheritance.

There are some downsides too.

[NorthDevon66]

Thanks for the advice. Holding property in SIPPS sounds interesting and I will investigate that further.

Does anyone have experience of buying at auction - any red flags to avoid, especially with regard to tenants leaving. What are the safest types of comm. property with regards to getting/keeping tenants? I imagine shops are possibly not a good idea with the increase in on-line shopping. What about office buildings - maybe easier to rent out?

[surveyor]

There really is no way to answer that question.

So much is down to location, the type of property and the type of tenant.

[NorthDevon66]

Yep, I understand.

I guess I was wanting for some way to minimize the risk of ending up with an expensive empty building in the event that the tenants move out earlier than expected. No doubt the answer is to understand better the area and market for any particular type of property.