Furnished Holiday Lettings – simply where you let out a furnished property on a short term basis - has its own tax treatment.
Furnished Holiday Lettings relief allows a holiday home owner to deduct directly attributable expenses – mortgage interest, agent commission, rates, cleaning, insurance and so on from their rental income.
On April the 6th there was a change to these rules. Where once it was possible to use this relief to offset losses from holiday let rental against other income, in is now only allowable against certain income from the same holiday lettings trade.
There are further proposed changes to come in this area – there’s a year to prepare for them as they are applicable on April 6th 2012.
Currently a property must be let to the public for 70 days each year. This will increase to 105 days , with the property being available for no less than 210 days (up from 140) each year.
Lets on the property must also not be longer than 31 days.
There will be a soft landing for this new legislation – businesses who don’t technically qualify in the first couple of years will be allowed to qualify if there was an intention to meet the requirements.
Although the loss relief has gone, it still applies for tax year 2010/11 and there are still ongoing benefits in qualifying for Furnished Holiday Lettings relief.