Holiday Lets are Taxed More Lightly than Normal Buy to Let
Holiday lets are treated differently from normal lettings and get additional relief from tax. To qualify as a “holiday” let, the property must be furnished to a degree necessary for normal occupation, available to let to the public for at least 140 days a year, actually be let for at least 70 days a year and not let to the same person for more than 31 consecutive days in a 7 month period. Lettings must be at market rents, not peppercorn rents to friends as the letting must be commercial, i.e. with a view to making profits.
With a furnished holiday let you can also claim capital allowances on the costs of fixtures and fittings, but the wear and tear allowance is not available, and you can “roll over” all capital gains onto another UK holiday let property.
If the property is let as a commercial letting of “furnished holiday accommodation” (or if it qualifies as commercial property), the rate of Taper Relief for CGT purposes is much higher than the taper relief that applies on normal rented property. You get what’s called the “Business Asset Taper Relief” which is nil for properties held for less an a year, 50% if held for between one but less than two years and 75% if held for 2 years or more!
With a furnished holiday let you can also claim capital allowances on the costs of fixtures and fittings, but the wear and tear allowance is not available, and you can “roll over” all capital gains onto another UK holiday let property.
If the property is let as a commercial letting of “furnished holiday accommodation” (or if it qualifies as commercial property), the rate of Taper Relief for CGT purposes is much higher than the taper relief that applies on normal rented property. You get what’s called the “Business Asset Taper Relief” which is nil for properties held for less an a year, 50% if held for between one but less than two years and 75% if held for 2 years or more!
This entry was posted by lettingfocus, on
Tuesday, December 12, 2006.
