Record Numbers of Holiday Homes Being Bought by British Investors
09 August 2011
Recent research shows that record numbers of holiday homes are being bought by British investors as rental income properties. However current owners are being reminded to claim tax relief on their holiday home, as this is the last year they will be able to do so under current regulations.
During the next financial year, holiday homeowners will be unable to offset allowances against total income and will only be able to use relief against income from a furnished holiday lettings business. From next year onwards by to let properties must be available for rent for 210 days each year, and must be let out for a minimum of 105 days. This is a huge increase as currently properties only have to be rented out for a minimum of 70 days each year.
France is still a popular place for second homeowners and holiday homeowners, but the laws here can often be quite complicated. The French government recently had to make a U-turn on proposals to increase the tax on holiday homes, but there are still many other stringent rules to be taken into account when buying property here. One of the most complicated is the law over inheritance which can insist that ownership passes on to the children rather than the spouse or any other beneficiary.
Many people have bought property under the umbrella of the company, and have held shares in a company specially set up for this purpose as opposed to owning the actual property and in the past this left them open to claims that usage of the property by a director of the company could be construed as a perk which is a considerable tax liability under UK law. Although a law was passed in 2008 which gave exemption to this sort of tax arrangement, anyone choosing to buy property in France may wish to take specialist tax advice before committing to the purchase.