Is a service apartment a residential or a commercial?

There has been a long debate about whether a service apartment is residential or commercial. Some experts call it residential, and some call it commercial. Let’s examine both sides and see which has more leverage than the other.

Why can we call it residential?

As you know, serviced apartments are fully furnished apartments that feature all the amenities of a residential apartment. Also, these apartments are meant for both short- and long-duration stays. In this case, when you’re staying in a serviced apartment for about two months for project work or business meetings, you’ll begin to feel at home like your own house. These are the major reasons why we can call it residential.

Besides, owing to the comfort and the huge set of facilities these apartments offer, some travelers or tourists tend to book the same serviced apartment every time they travel to that particular city or place. This kind of repeated visits or stays makes it more residential than commercial, even though you pay the rent or accommodation charges. Most importantly, the service apartment facilities will not allow you to think it is a hotel or a lodge-type.  

Why can we call it commercial?

As per the state and/or central government gazette, these furnished apartments are expected to pay property tax under commercial property norms or rules. Also, it is mandated for these properties to obtain a trade license in order to initiate the booking for accommodation. Thus, on legal terms, these serviced apartments are considered commercial. 

Moreover, lately, these properties are maintained and managed like regular commercial hotels with security, help desk, maintenance staff, hospitality, etc. This is another reason why the government wants to declare them commercial. In this case, even though people feel it is residential on an intangible note, these are considered commercial on a legal note. 

On the other side, it is apparent that any property that involves rental income is taxable and is claimed as business income or income from other sources. This is irrespective of whether the property owner is a single person, entity, or multiple people or entities.     

Conclusion

Though we have ‘n’ a number of reasons to prove a serviced apartment a residential or commercial, after all, what matters is the law. And it varies from city to city or state to state. For example, in Coimbatore, Tamil Nadu, it depends on the project description while getting approval from the corporation before the construction. However, in Bengaluru, Karnataka, the BBMP claims that all serviced apartments are considered Hotels, which is commercial. 

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