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- End of holiday home tax relief...
Monday 17 August 2009 -
For many years, HM Revenue and Customs has treated the renting out of holiday homes as a business and not an investment, which brings several advantages – not least the option to offset any losses made in the course of renting out the property against the owner’s other income. However, in this year’s budget the Chancellor announced that tax break would be withdrawn from 6 April 2010.
Up until that date, claims can still be made for UK properties, as well as – for the first time – holiday homes within the European Economic Area (the EU plus Norway, Iceland and Liechtenstein), providing a one-off opportunity to utilise any losses, thereby saving UK income tax.
To qualify for this special tax treatment, a property must meet certain criteria, namely:
• It is available to rent for at least 140 days each tax year.
• It must be let as holiday accommodation for at least 70 days during the tax year.
• A letting exceeding 31 days to the same person is not treated as a holiday let.
• When it is not let for holidays, it must not be rented out for any other reason for more than 155 days per year.
Andy McQuillan, Tax Partner at Dains said: “Holiday home owners whose letting income currently makes a loss, or even breaks even, may want to take advantage of the last year of this tax break by carrying out any outstanding maintenance jobs to maximise tax relief. However, it is important to distinguish between repairs and improvements, as the latter count as capital expenditure and are not deductible for income tax – although they can still be counted against Capital Gains Tax if the property is sold”.
For more information please contact Andy McQuillan on 0845 555 8844 or email marketing-department@dains.com
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