Tax Advantages Of Renting Out Holiday Homes

The main advantage when it comes to holiday homes, as opposed to renting out other types of property, is that when you let out a furnished holiday home in the UK, your rental income will be treated more favourably for tax purposes than from other rental income. 

However, your property qualify as a holiday letting property it must be:

• In the UK
• Furnished
• Available for holiday letting to the general public for greater than  140 days per year.
• Actually let out for at least 70 days a year (and these must be proper commercial lets, not at mates rates to friends and family)

Also the holiday lets must be both:

• Short term lets of less than 31 days
• The only lets over a period of at least seven months .

Also, you can't let the property as a holiday let to the same person for more than 31days in the year.

However, if you meet all the qualifying tests in this critical seven month period, there are no restrictions on what you do in the remaining five months of the year.

But these longer lets do not count as holiday lets.

Your profit on UK holiday lettings is calculated in the same way as for other rental income, except you claim 'capital allowances' rather than the 'wear and tear' allowance.

Examples of expenses that qualify for capital allowances include the cost of furnishings, furniture, refrigerators and washing machines.

See the 'land and property' help notes of the Self Assessment tax return for further detail or visit the Inladn Revenue website for further guidance.

If your property fails to qualify as a holiday let, you will be taxed as normal for rental income.