Change to holiday lettings tax laws for owners

Owners of furnished holiday homes both in the UK and abroad in popular holiday hotspots such as the Costa del Sol in Spain and the Algarve in Portugal could be affected by a new taxation law being introduced by the coalition government.

Under current legislation owners must have a holiday home available for rental for 140 days per year, but the actual property only needs to be rented out for 70 days in order for the owner to qualify for taxation benefits.

The current benefits allow owners to offset excess property expenses, such as mortgage interest, against other income at the owners’ highest rate of income tax. Holiday home owners can also take advantage of a capital gains tax rate of just 10% on profits gained from the sale of the property.

The changes will now mean that holiday homes will need to be available to rent for 210 days per year and actually rented for 105 in order for the same tax benefits to be enjoyed.

The change will also see the option to offset losses arising from the running of the holiday against other general income removed altogether.

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