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Chartered AccountantsChartered Accountants

Furnished Holiday Lets - Capital Gains Tax

A sale of a furnished Holiday home should qualify for Entrepreneurs relief. Consequently both basic rate taxpayers and higher rate taxpayer selling a Furnished Holiday let have an effective tax rate on sale of just 10%.

The various CGT reliefs that apply to businesses also apply to holiday lets, Two other tax relief are therefore potentially available on disposal of a Furnished Holiday Let, firstly the ability to “roll-over” any gain made on sale into the purchase of another qualifying business asset, including another Furnished Holiday Let, and secondly the ability to “hold-over” any gain arising on gifting the property.  This has the effect of deferred any capital gains tax until the new owner sells the property.

To qualify as furnished holiday accommodation, a number of conditions must be met, details of which are provided from 6 April 2012 for accommodation to qualify as furnished holiday accommodation, a number of conditions must be met, including:

  • The property must be situated in the European Economic Area.
  • The property must be let on a commercial basis.
  • It must be available for let for at least 210 days a year. (previously 140 days)
  • It must actually be let for at least 105 days a year. (previously 70 days)

Total periods of longer term lettings ( ie lets longer than 31 days) must not exceed 155 days per annum.

Are you thinking of selling a holiday home and need to know more about the likely Capital Gains tax consequences, contact bb@moco.co.uk

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