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
