Do I buy a holiday let personally or via company?
I’m looking to buy a house in a beach location to become a furnished holiday let, the main reason is to have a house available for my family to use about 4 – 8 times per year. We are a big family and have foster children so going to the same destination is better all around. (that’s our justification on this controversial topic!)
The plan is to rent it out when not using it. With the various rules changing for FHL and the disruptive holiday market, it’s difficult to anticipate if the house will yield a profit or loss. For us, we would be happy if it suited our needs and broke even over a 5 – 10-year period.
I have 6 HMOs, 2 personally and 4 in a limited company, my default route is to buy it via the property company so any potential losses can offset the profit.
I would appreciate views on the pros and cons related to either route and any other thoughts which might help my thinking.
Many thanks
Tim
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Member Since January 2020 - Comments: 559
8:02 AM, 11th July 2022, About 4 years ago
If you buy in a company, any personal use will have to be paid for, or will be treated as a benefit in kind. You will need to do the maths as to whether this is viable.
Member Since June 2015 - Comments: 194
10:37 AM, 11th July 2022, About 4 years ago
For FHL if you make a loss in the year the loss can be offset agaisnt your other income in the same year. They are considerd to be trading losses and can be offset this way.
Depending on the level of tax that you pay this may be more beneficial than offsetting against income in your company taxed at 19%.
As with all thinigs it is a matter of “doing the maths” for you persoanlly.
Member Since April 2021 - Comments: 189
2:00 PM, 16th July 2022, About 4 years ago
Reply to the comment left by Simon Lever – Chartered Accountant helping clients get the best returns from their properties at 11/07/2022 – 10:37
You can no longer offset furnished holiday letting losses against other income. This change came into effect from the tax year ending 5 April 2012. You can only offset furnished holiday letting losses against future profits from the same property.
For further information read ‘What you can do with losses’ of the HMRC helpsheet.
If this is no longer the case please let me know!