It’s a well known fact that Furnished Holiday Lets benefit from many tax advantages in comparison with long-term rental properties.
Furnished Holiday Lets benefit from Entrepreneur’s Relief. This means that the capital gain on sale of a property is taxed at 10% instead of the residential rates of 18% (basic rate) or 28% (higher rates).
Furnished Holiday Lets are also not subject to the mortgage interest restrictions wherein only 50% (2018/19) will be an allowable expense.
The Furnished Holiday Lets status is therefore more valuable as any mortgage interest costs are fully deductible.
It may be worth reviewing your letting arrangements to see if your properties can be restructured to short-term lettings in order to meet the annual qualifying conditions:
- Must be let for 105 days
- Available to let for 210 days
- Lettings must not exceed 31 continuous days
This could be a more attractive option than selling your buy-to-let properties in an uncertain property market.