If you let out a furnished holiday home in the UK or the European Economic Area (EEA), you may be entitled to certain tax advantages. However, your property must meet some rules to qualify.
Rules for furnished holiday lettings for the 2011-12 tax year
To make sure your property qualifies as a furnished holiday letting, it must be:
- in the UK or EEA
- furnished
- available for commercial letting to the public, as holiday accommodation, for at least 140 days a year (210 days for 2012-13)
- commercially let as holiday accommodation for at least 70 days a year (105 days for 2012-13) – the rent must be charged at market rate and not at cheap rates to friends and family
- a short term letting of no more than 31 days
Tax advantages of furnished holiday lettings
The tax advantages if your property qualifies as a furnished holiday letting are:
- you can claim capital allowances
- you get the benefit of some favourable Capital Gains Tax rules when you sell or `otherwise dispose’ of the property
If your property doesn’t qualify
If your property doesn’t qualify as a furnished holiday letting – for example you own a holiday villa outside of the EEA or you don’t let it out for enough days – you’ll be taxed under the residential property lettings rules.
- Find lot’s more furnished holiday lettings tax guidance on the HMRC website
- Furnished holiday lettings tax helpsheet
- Legal case clarifies taxation of holiday lets in the UK
For peace of mind that your furnished holiday letting properties are fully protected, contact Boshers for a holiday home insurance quote today.