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oldsport

Second Home Owners To Lose Tax Breaks

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great news

http://www.telegraph.co.uk/finance/personalfinance/7916820/Second-home-owners-to-lose-tax-breaks.html

The tax advantages on furnished holiday lets were reinstated by the Coalition after the previous Government abolished them in April.

George Osborne reversed the measure in the June Budget saying he wanted to help small businesses operating in the tourism industry.

However, the Treasury has now said it intends to make it much tougher for home owners to qualify for the breaks.

The move comes as the Government prioritizes reducing the country’s deficit.

Under the proposals, home owners will need to secure more bookings and will no longer be able to offset their mortgages costs against their personal income. This tax break is one of the main financial reasons for investing in a furnished holiday let as it helps to reduce an individual’s overall tax liabilities.

The new proposals aims to bring the rules in line with EU law and make them focused on commercial businesses rather than those run for personal use.

It means more than a quarter of the 65,000 home owners offering holiday lets in Britain will no longer be eligible for the tax benefits from 2011-2012, according to a consultation document published by the Treasury.

The consultation said the changes to the rules needed to be “affordable”.

Mike Warburton, of accountants Grant Thornton, said: “The coalition has recognized the importance of this relief to the holiday industry, but clearly want to restrict a loss to the Exchequer in extending the relief to homes throughout the EU as the law requires.”

The taxman requires certain conditions to be met before the furnished holiday lettings rules can be applied.

The Treasury is now proposing that the property must be available to let for a total of 210 days in a 12 month period, up from the current level of 140 days.

And it is suggested that the property must be actually let for at least 105 days during that year, up from just 70 days.

The Treasury also wants to restrict losses from furnished holiday lets so that they can only be set against future profits from that same business. It means losses, such as mortgage interest and any repairs, cannot be offset against other investment incomes, such as from shares or savings.

Accountants warned that some home owners may be forced to sell up to reduce their debts and it could deter those who were thinking about getting a holiday let in the future.

Leonie Kerswill, a tax partner at accountants PricewaterhouseCoopers, said: “Home owners who regularly use their property for family trips, and who do not generally leave much time for other members of the public to use will have to rethink, and ensure that they let their homes for three and a half months each year if they want to be eligible for a 10 per cent Capital Gains Tax rate on an eventual sale.”

There are also other tax breaks that apply to furnished holiday lets, such as capital gains tax roll-over relief, which is expected to continue.

* Current rules

Must be available to the public for 140 days within a 12 month period

Must be actually let to the public for 70 days

If the holiday let makes a loss due to the rent not covering the mortgage payments, these losses can be offset against personal tax liabilities

* New rules

Must be available to the public for 210 days

Must be actually let to the public for 105 days

If the holiday let makes a loss due to the rent not covering the mortgage payments, these losses cannot be offset against personal tax liabilities

Edited by oldsport

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Makes me wonder if the penny is starting to drop in the minds of the ignorant.

HPI is an economic disease not a means of economic growth. Nulabour were HPI friendly in the extreme sense of the word and its going to take a few years to remove the boosters that created the hideous bubble that still lingers like a nasty fart.

Edited by Realistbear

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HPI is an economic disease not a means of economic growth. Nulabour were HPI friendly in the extreme sense of the word and its going to take a few years to remove the boosters that created the hideous bubble that still lingers like a nasty fart.

Over time (and thanks to this fourum), I've learnt to regard it as simply the vehicle that was used for the credit expansion of the past 7 or 8 years. Back in 1920's, the vehicle was the stock market.

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Over time (and thanks to this fourum), I've learnt to regard it as simply the vehicle that was used for the credit expansion of the past 7 or 8 years. Back in 1920's, the vehicle was the stock market.

Yep, the banks invent these vehicles just so they can lend to every Tom, Dick and Harry.

They can do this in the knowledge they've got the power over politicians to ensure it happens without everyone twigging who's 4eally pulling the leavers, eg Gordon Brown and his "Post-Neo-Classical Endogenous Growth Theory".

Whatever will the banks think up next?

Edited by Dave Spart

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I'm not so sure. The little parasites have to be convinced that in 10 years time it will be worth less than what they paid for it otherwise they will see it as an investment worth keeping hold of. The majority are convinced that after this little blip property will continue to grow at near to double digit growth year on year.

The only thing that would really bring the whole thing down is a Second Homes Tax

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I'm not so sure. The little parasites have to be convinced that in 10 years time it will be worth less than what they paid for it otherwise they will see it as an investment worth keeping hold of. The majority are convinced that after this little blip property will continue to grow at near to double digit growth year on year.

The only thing that would really bring the whole thing down is a Second Homes Tax

...there's a high percentage who would have bought purely for the tax off-set against income on other investments ....having been advised by smart accountants ....must admit I was uanaware of these arrangements until they were banned .. and now even those who are purely HPI inflation punters will know such an exodus wrapped into the credit crunch will spur a niche crash .... :rolleyes:

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  • 244 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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