Changes to furnished holiday lets tax breaks
New criteria could affect tax breaks for owners of furnished holiday lets
There’s mixed news for owners of furnished holiday lets. The UK’s coaliton government is changing the criteria by which a property can be classed as a furnished holiday let and benefit from tax breaks not available to residential lettings (or buy-to-let properties).
The revisions, as set out in draft legislation for the 2011 Finance Bill, include: the minimum period over which a property must be available for letting to the public increasing from 140 to 210 days in a year; and the minimum period over which a qualifying property is actually let to the public in the relevant period increasing from 70 days to 105 days in a year. While the majority of the revisions will come into effect from April this year, many of the changes to the qualifying criteria will be actioned from April 2012. This is partly so that landlords of furnished holiday lets can boost their marketing. As Richard Hatt, of overseas financial experts, Siddalls, says: “Increasing the number of days that a property must be let from 70 to 105 means that owners of FHLs will effectively have to find more than another month’s worth of holiday lets each year for their property to qualify.”
Tax breaks for properties that qualify as a furnished holiday let include capital allowances (for example furnishings and furniture, and equipment, such as refrigerators and washing machines) and also breaks concerning any loss made on rental income and if you decide to sell or otherwise dispose’ of your property.
For properties that no longer qualify under the new criteria, rental income will instead be treated in the same way as that for residential property lettings. With, for example, a wear-and-tear allowance instead of capital allowances, this system is not regarded as being so generous.
However, there is encouraging news for holiday-homeowners in France. Once again, France is the top destination in the world for tourism, according to the World Tourism Organisation (UNWTO), which will be publishing its exact figures shortly. Meanwhile, for invaluable advice about the French side of furnished holiday lets tax, see the March issue of French Property News, out now.
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