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    July 19, 2020
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PROMOTION Holidays at home f ith so much international travel only home. This is based on the rules and is closed for part of the year then announced by the Chancellor on 8 July you can deduct all of the expenses such as insurance and loan interest for the whole year, providing you don't live in it. Finally, consider the timing of and take advice before selling the property, as Capital Gains Tax may be payable in the future. Considering all of these factors is important to get a true picture of the costs of holiday home ownership. upheaval recently and 2020. the future still uncertain, If you plan to rent the house out to many people might be considering whether holidays in the UK are simply going to be easier for the foreseeable future and this might include buying a holiday home of their own. Estate agents have reported a surge in interest for seaside and country properties in recent weeks however it is important to fully understand your tax position to avoid landing yourself with a large liability, especially if you already own one or more other properties. You also need to decide if it is goling to be home for your own use only, or if you intend to let it out. Firstly, consider how you finance the purchase if you need a mortgage and are not buying it outright. There are not many lenders who offer mortgages for holiday lets and following the Covid-19 pandemic it might be more difficult to get funding. Consider also how you own the property. Stamp Duty Land Tax("SILT")is cakulated at a different rate if you own an existing property for example; if you are buying a property worth £400k and you already own one or more properties, then you will pay SDLT which will cost other people to help cover the costs and you meet the criteria for Furnished Holiday Lets (FHL) then there are potential tax benefits. The criteria you need to meet are: The property is available for letting for at least 210 days a year and: Itis occupied by paying guests for at least 105 days a year, but the same guest can't be in your property for more than 31 days (unless it is exceeded because something unforeseen happens). Ifyour property meets the criteria for a FHL., you can also claim capital allowances on your property related purchases and you are currently able to deduct all of the mortgage interest and other finance costs before caleulating tax liability. If you own more than one property asa FHL and one or more doesn't meet the letting condition of 105 days, then you can elect to apply the condition to the average rate of occupancy called an averaging election. You can only average across properties in a single FHL business and you can't mix UK and European Economic Area properties together. If the property is only used as a FHL. Jo White is a Director of Tax Advisory at Kreston Reeves Jo.white@krestonreeves.com T: 0330 124 1399 E12k compared to nothingifit was your KRESTON REEVES Kreston Reeves has offices across Kent, London and Sussex. www.krestonreeves.com PROMOTION Holidays at home f ith so much international travel only home. This is based on the rules and is closed for part of the year then announced by the Chancellor on 8 July you can deduct all of the expenses such as insurance and loan interest for the whole year, providing you don't live in it. Finally, consider the timing of and take advice before selling the property, as Capital Gains Tax may be payable in the future. Considering all of these factors is important to get a true picture of the costs of holiday home ownership. upheaval recently and 2020. the future still uncertain, If you plan to rent the house out to many people might be considering whether holidays in the UK are simply going to be easier for the foreseeable future and this might include buying a holiday home of their own. Estate agents have reported a surge in interest for seaside and country properties in recent weeks however it is important to fully understand your tax position to avoid landing yourself with a large liability, especially if you already own one or more other properties. You also need to decide if it is goling to be home for your own use only, or if you intend to let it out. Firstly, consider how you finance the purchase if you need a mortgage and are not buying it outright. There are not many lenders who offer mortgages for holiday lets and following the Covid-19 pandemic it might be more difficult to get funding. Consider also how you own the property. Stamp Duty Land Tax("SILT")is cakulated at a different rate if you own an existing property for example; if you are buying a property worth £400k and you already own one or more properties, then you will pay SDLT which will cost other people to help cover the costs and you meet the criteria for Furnished Holiday Lets (FHL) then there are potential tax benefits. The criteria you need to meet are: The property is available for letting for at least 210 days a year and: Itis occupied by paying guests for at least 105 days a year, but the same guest can't be in your property for more than 31 days (unless it is exceeded because something unforeseen happens). Ifyour property meets the criteria for a FHL., you can also claim capital allowances on your property related purchases and you are currently able to deduct all of the mortgage interest and other finance costs before caleulating tax liability. If you own more than one property asa FHL and one or more doesn't meet the letting condition of 105 days, then you can elect to apply the condition to the average rate of occupancy called an averaging election. You can only average across properties in a single FHL business and you can't mix UK and European Economic Area properties together. If the property is only used as a FHL. Jo White is a Director of Tax Advisory at Kreston Reeves Jo.white@krestonreeves.com T: 0330 124 1399 E12k compared to nothingifit was your KRESTON REEVES Kreston Reeves has offices across Kent, London and Sussex. www.krestonreeves.com