The Tax Benefits of Buying a Holiday Let
A holiday let can be a tax-efficient business opportunity.
A holiday let is regarded as a business, not simply a property let so mortgage interest can be claimed as an expense against tax unlike with a standard buy-to-let. To qualify for this your property will need to qualify as a furnished holiday let (or FHL as it’s known). A furnished holiday let should be available to rent for at least 210 days in a tax year and let for at least 105 of those days. The total of all lettings that exceed 31 continuous days must not exceed more than 155 days during the year.
With holiday lets you should be able to claim all the running expenses of your holiday property business against your income. This includes all utility costs, cleaning and maintenance costs, the replacement of domestic items, marketing expenses and agency fees.
Holiday lets may be eligible to pay business rates rather than Council Tax, which may be cheaper or even zero if you are eligible for Small Business Rate Relief.
There may be Capital Gains Tax (CGT) and Inheritance Tax (IHT) benefits to buying a holiday let.
It is essential to take professional financial and tax advice before buying a holiday let if you want to maximise the tax benefits and minimise your tax bill.