Have you thought about either converting your rental property to a holiday let or start to let out part of your home to holidaymakers? Not only could you benefit from a greater level of rental income than a buy-to-let rent but also more preferential tax treatment.
What required to be classed as a Furnished holiday letting?
- Available to let for at least 210 days a year
- Actually let for at least 105 days a year
- Not let for a period of 30 days or more on the same let at any time during the year
Mortgage interest relief
- From April 2020 Buy to let investors will only receive a 20% tax credit on the mortgage interest
- Furnished holiday lets can deduct the full value of mortgage interest against rental profits even beyond April 2020.
Capital gains tax
- If you are considering letting your home in whole or in part for the first time you should consider the capital gains tax consequences
- If the Furnished Holiday Let is treated as a business for tax purposes it can be eligible for a reduced capital gains tax rate of 10%
Rental yields
The National Average for furnish holiday let yields is 10% but the average is expected to increase to 14% by 2022. One of the important factors in determining rental rates are good online reviews. With few reviews in the first-year rents will have to be priced competitively, but landlords could see a 5-10% annual increase in rates as good reviews are received.
Fees
Agents to manage the lettings can charge up to 20% of the letting fee but can aid in getting the all-important holiday makers through your doors.
If you would like to know more about Furnished Holiday lettings please e-mail mandy@beatons.co.uk or call 01473659777 to arrange a meeting to discuss the financial implications.