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posted on August 13, 2019
Tax on a holiday let property is different from a standard property let and it is important to be aware of the issues:
There are a number of tax incentives that you can take advantage of if you own and let a Furnished Holiday Lets property (FHL). They include:
You will need to account for your holiday lets properties separately from any other rental properties and you will need to comply with the various FHL rules. They include:
There are also strict rules on occupancy. To secure the FHL tax benefits you will need to let your FHL for a certain, minimum number of days each year. The occupancy rules, set on a tax year basis, are:
Do not count any days when you let the property to friends or relatives at zero or reduced rates as this is not a commercial let.
Do not count longer-term lets of more than 31 days, unless the 31 days is exceeded because something unforeseen happens. For example, if the holidaymaker either: falls ill or has an accident and cannot leave on time or has to extend their holiday due to a delayed flight.
If you do not let your property for at least 105 days, you have two options (known as elections) that can help you reach the occupancy threshold.
As you can see, there are a few hoops to climb through to achieve FHL status, but the tax rewards for doing so are significant.