As investors holding property in companies explore ways to optimise their real estate holdings, converting commercial properties to residential use is one option they may consider. Carrying out such transformations comes with a number of challenges and understanding the tax implications will be one of the important factors.

Typically, we see two options; converting properties to hold as an investment or converting them to sell. Depending on the extent of the original business some of the tax matters mentioned below may or may not apply. It is therefore important to seek bespoke advice to your circumstances, should this be something you are exploring.

For the company itself you need to consider the tax position of closing the original business, or part, and then the ongoing position following the property conversions. There are also tax aspects for the shareholders which should not be overlooked.

For the conversion itself: