UPDATED: The attractions of Holiday Lets

In the absence of viable alternatives, with ultra low interest rates and soaring property asset prices, investment ©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - UPDATED: The attractions of Holiday Lets | LandlordZONE.

UPDATED: The attractions of Holiday Lets

In the absence of viable alternatives, with ultra low interest rates and soaring property asset prices, investment in property has become a phenomenon of 21st century Britain and holiday lets, holiday homes and holiday letting businesses are no exception.

Tax advantages  

In addition, there are some valuable tax advantages with holiday lets over buy-to-let properties. For example, capital gains tax on profits when you sell is lower with holiday lets and as it’s a business you can claim more expenses from your rent every year to reduce income tax.

Tax advantages like these can be a real boost when you see that some properties have achieved 25% increases in the first decade of the 21st century and this has continued.

Don’t think that your holiday cottage need be beside the sea: many of the tourist hotspots and Heritage Trail cities such as York, Stratford, Bath and Edinburgh can attract very good rents in the high season, and in some cases all year round, enabling you to easily cover mortgage costs.

City properties offer a safer year-round bet as it’s easier to continuously attract occupants off season, and you can always take advantage of the accommodation yourself, if you want to, as an added bonus. However, there are restrictions to “own use” in the tax rules – see below.

Tax Incentives for a Holiday Letting Business

Note, these rules can change – always check the latest rules on the valuable tax advantages

Holiday lettings is recognised as a business (generating earned income) by HM Revenue & Customs, unlike other forms of property letting which HMRC class as investment income (unearned income)

There are some valuable tax incentives for letting your property as a holiday home, but there are some exacting HMRC rules which you must follow:

– Your accommodation must be available for letting to the public for at least 210 days of the year and actual letting must be at least 105 days.

– Any one occupier (or group) cannot stay for more than 31 days in any period of seven months, but they can for the remaining five months.

– You cannot claim the tax incentives when you use the accommodation yourself, or when the property is not available for letting.

– The property must be fully furnished.

– The lettings must be at full market rent, not a peppercorn rent for friends and relatives.

– Your rental income is subject to income tax, but ALL expenses are allowable.

Allowable Expenses against Holiday Lettings Business Income

  • Repairs and maintenance
  • Decorating
  • Heating & lighting
  • Legal and letting agent’s fees
  • Management fees and cleaning costs
  • Insurance
  • Mortgage interest payments

Losses & Tax Advantages – Holiday Lettings Businesses

– In addition, if the business makes a loss, which it is likely to do in the early years, you can offset this against any other income you may have from any other source and thereby reduce your overall tax bill.

– Married couples can maximise tax allowances by having the property in the name of the lowest earner. This is particularly advantageous if the lowest earner is in the lower rate tax band and the higher earner is in the higher band.

– When you sell you holiday letting you will be subject to capital gains tax as you would if you sold a buy-to-let property, BUT at a more advantageous.

– You can avoid paying capital gains tax altogether if you invest the proceeds of your sale in another holiday letting property within 3 years – this is known as roll-over relief.

– Roll-over relief can also be used to avoid paying capital gains tax on sales of other types of businesses, where the proceeds are invested into a Holiday Lettings Business.

Your income and expenses for your holiday let business must be declared to HMRC on your annual self assessment tax return due any time from 31 October through to 31 January.

Mortgages for Holiday Homes and Lettings

One way to finance your holiday let is to increase the mortgage on your main residence.

Borrowing against your own home may mean you can buy a second home outright, or at least put down a substantial deposit.

Alternatively, you may want to buy an established holiday letting business from the owner which may include a portfolio of holiday cottages or town houses. Business finance is available from the banks.

Insurance for Holiday Homes and Lettings

In these days of higher risks and a litigious public, adequate insurance cover is vital. The types of cover you need to consider are:

  • Buildings cover – your mortgage company will insist on this
  • Contents cover – your own contents should be adequately covered, whilst your guests should cover their own contents and accidental damage to your property.
  • Public liability – covers you for civil actions brought by guests who may sustain injury on your property.
  • Employee liability – you are likely to employ casual labour in the process of running your small business and this cover is a legal requirement.
  • Loss of rental income cover – this can be had for a small percentage of the annual rental income.
  • Cancellation insurance – in case guests let you down.
  • Personal accident insurance – in case you are incapacitated at critical times.
  • Motor insurance for business use – you are likely to use you vehicle for the holiday letting business.

Holiday Letting – Bookings Scams

There have been many instances of holiday makers falling for bookings scams, but there have also been several instances of bookings scams on landlords reported recently. The aim of these is usually for the person booking the holiday to obtain your bank details, or sends a dud cheque / money order for more than the actual booking, then asks for a refund BEFORE the cheque clears. Always make sure the funds are in your bank before giving refunds and NEVER disclose you bank details.

©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - UPDATED: The attractions of Holiday Lets | LandlordZONE.

Source : Landlord Zone More   

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‘Renting with pets’ activists mark tragic death of supporter David Amess MP

Campaigners hoping to persuade ministers to make it easier for landlords to accept tenants with pets have ©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - ‘Renting with pets’ activists mark tragic death of supporter David Amess MP | LandlordZONE.

‘Renting with pets’ activists mark tragic death of supporter David Amess MP

Campaigners hoping to persuade ministers to make it easier for landlords to accept tenants with pets have been marking the death of ‘staunch supporter’ and politician David Amess.

The 69-year-old Southend West MP died on Friday after being stabbed during a constituency surgery he held within a Methodist church in Leigh-on-Sea.

Amess, who was well-known as a supporter of animal causes, earlier this year added his name to a campaign organised by East Midlands based organisation AdvoCATS to have the Tenant Fees Act amended to allow landlords to either take additional deposits off tenants seeking to rent with pets or require tenants to take out extra insurance.

He was one of 42 MPs and Lords who the campaign had signed up, along with many key organisations including UKALA, the NRLA, Hamilton Fraser, the , Propertymark, LandlordLaw, the LibDems, Generation Rent, OpenRent, Property Tribes, LandlordZONE and landlord association EMPO.

Jennifer Berezai (pictured), who co-founded AdvoCATS, says: “Every so often you get a politician who transcends the political divide and holds the deep respect and affection that was felt for Sir David Amess.

“He was a staunch supporter of many animal related charities and movements, including Heads for Tails! and was due to raise a question on our campaign’s behalf in parliament later this month, so his murder has an extra element of sadness for us.

“Our thoughts and prayers are with his family, friends and colleagues who have been robbed of a good man.”
AdvoCATS’ Heads for Tails! report calls for changes to the law to make renting with pets ‘fair and easier for all’.

©1999 - Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® - ‘Renting with pets’ activists mark tragic death of supporter David Amess MP | LandlordZONE.

Source : Landlord Zone More   

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