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Click here to e-mail your query or to arrange a free initial meeting to discuss Property Tax.
Income Tax
- Please see separate Fact Sheet for Income from “Furnished Holiday Lettings”.
- HM Revenue and Customs will need to be told about the income and annual tax returns completed for the owners of the property.
- Losses sustained can be offset against other Income from Property in the same year, or carried forward to future years.
- Allowable expenses include Rates, Insurance, Light & Heat, Agents Commission, Advertising, Repairs and Cleaning together with Interest of Loans (as opposed to Capital).
- If sufficient furniture is provided so tenants do not necessarily need to provide their own, the property may qualify for the “10% Wear & Tear allowance”. Alternatively, the “Renewals” basis may be adopted, but the decision must be made at the outset for each property.
Profits will be taxed at 10%, 22% or 40%, depending on the level of other income.
Capital Gains Tax
- For Capital Gains Tax purposes, the property will be treated as a “Non-business Asset” and will therefore qualify for “Taper Relief” of 5% after the first three years of ownership and an additional 5% per year thereafter to a maximum of 40%. This means that Capital Gains Tax may only be payable on 60% of the gain made.
- A period of occupation by the owner, accompanied by the appropriate Election, if necessary, may substantially reduce any capital gain.
Inheritance Tax
- The property will not qualify as “Business Property” and will therefore be subject to Inheritance Tax.
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