Mak­ing money and mem­o­ries

How the hol­i­day busi­ness can be a good in­vest­ment for would-be land­lords

EDP Norfolk - - Finance -

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

En­trepreneur­s’ Re­lief.

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!Š

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