Clive Relf FCA
- Private Client Tax Partner
- +44 (0)330 124 1399
- Email Clive
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View all peoplePublished by Clive Relf on 11 December 2018
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This article is the third in a series in which we focus on property issues in our bi-monthly e-newsletter for individuals and their families, Pathfinder – personal tax and wealth (sign up here). Over the next few editions of the e-newsletter we will further explore the most common property tax issues our clients are asking us about. Whether a landlord, or simply someone looking to utilise property as an investment for their (and their family’s) future, this series will seek to advise you on your options, and prevent you from falling foul of any unforeseen tax implications!
In this article we look at the tax advantages of investing in a furnished holiday home (FHL)…
Many who include residential property as part of their savings/retirement plan are these days increasingly looking at holiday homes (furnished holiday homes, or FHL) in preference to the traditional buy-to-let (BTL) properties.
This preference is driven by FHLs offering potentially much greater yields compared to BTLs plus a far more attractive tax profile…especially following recent changes introduced by HMRC to dampen down the BTL market.
In practice HMRC allow a modicum of flexibility if there is one or two years where a given property fails the 105 day test and averaging is allowed where more than one FHL is held. That said, a given property in a particularly unpopular location is unlikely to meet the occupation test so wouldn’t be eligible.
A combination of the above advantages can make FHLs ideal vehicles as part of an investment portfolio. FHLs are not tax exempt for inheritance tax purposes but careful planning can result in them being transferred between generations without triggering tax liabilities.
To find out more about how an investment in a FHL might help in your own circumstances please speak with your usual Kreston Reeves adviser, or contact us here or on +44 (0)330 124 1399.
Look out for the next property focussed article in February’s edition of Pathfinder – Personal tax and wealth update. To sign up to receive this complimentary bi-monthly newsletter, and other Kreston Reeves publications/event invitations, please click here. There is also the option to subscribe to receive our exclusive ‘property and construction’ sector updates, events and webinars for those with particular interest in this sector.
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