Making money and memories
How the holiday business can be a good investment for would-be landlords
ARE you currently – or looking to become – a landlord or property owner, but have been deterred from making that next step? Then shake off those nagging doubts and come rally round.
Many of you may not be aware that the ‘meddling hand’ of the government has still left one very attractive area of property to invest in.
‘What is this fantastic opportunity?’ I hear you cry.
Think back to those halcyon days as a child – the summer holiday to the seaside, or the trip to that special place in the countryside only you recall because of that secret hiding place your big, bad brother couldn’t find.
Well, it was likely that these memories were founded upon holiday homes – or rather, Furnished Holiday Lets (FHL).
So, what are Furnished Holiday Lets? It’s all in the name: they’re furnished properties let out for short-term purposes. Want to know more?
Well, unlike other property businesses there are many tax advantages to acquiring one of these over an ordinary investment property.
To start with, they are considered a trade, thus you get all the attendant associated perks, including:
Relief on capital expenditure such as fixtures, fittings, furniture, etc.
Additional relief for pension contributions.
Favourable tax rates in the event of sale, through
There are many tax advantages to acquiring a Furnished Holiday Let over an ordinary investment property
Avoid tax altogether by reinvesting the proceeds into a qualifying new asset, or by gifting the FHL to your son or daughter tax-free – yes, tax-free. Sounds too good to be true, no? Well, it isn’t; but of course there are a number of critical conditions that need to be met. These are as follows... The accommodation must:
Be commercially let with a view to profit.
Be furnished (clue’s in the title) - rules don’t specify the exact constraints of this, but the obvious really – beds, sofas, soft furnishings, etc.
Be available to let for 210 days in the tax year.
Actually be let for 105 days in the tax year.
Be a short term let. Any continual occupancy over 31 days doesn’t count, and there mustn’t be five of these in the tax year. In a nutshell, that is that. If this has piqued your curiosity and you have questions to ask, then do seek professional advice.
Who knows, you might be a memory-maker this coming summer!