New Tax Rules For UK Holiday Lets

The rental sector may have received little recognition during the 2010 Budget Report for its relevance to the UK’s economy, but coming tax changes to UK holiday lets could spell bad news for many property investors who use it to offset their expenditures…

Previously property owners of furnished property lets were able to take advantage of capital gains tax reliefs, capital allowances and offsetting losses.

However as of the 6th April 2010, this legislation will change transforming furnished holiday homes from trading businesses into property investment businesses similar to that of buy to let.

And already many property advisors are predicting that this loss of tax relief will dissuade many new businesses from establishing themselves. Without the capacity to offset their capital expenditures against other income, it will now take their property lets a lot longer to become profitable…

Fortunately property portal holidaylettings.co.uk has revealed some helpful tips to property owners to help them deal with these new tax laws. Under their advisement:

Property investors can deduct allowable expenses from their rental income in order to get a net profit. This includes: letting agent fees, council tax, maintenance and repair costs, utility bills, interest on mortgage payments, building and contents insurance, and additional running costs.

In addition, property investors can also deduct wear and tear allowances (based on a % of the rent) or a renewals allowance (cost of replacing an old item). By deducting these allowances, you will be able to calculate taxable profit which can then be added to your overall taxable income.

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Fraser Stirling, Property Mentor Delegate

No matter what the media wants you to believe, property is still the only investment route where you can benefit from an asset that will NEVER go into zero value. Even when I was university I admired properties ability to withstand the economic elements and stay strong, even when other investment forms faltered or failed. X years on, I am now the proud owner of multiple property investments - one of which earns a passive income of £4,680 and my property portfolio is still expanding. Read more