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Furnished Holiday Let

Furnished Holiday Let

Hi I wonder if anyone can give me their opinion on the following queries.

1. An individual has an existing property which qualifies as an FHL. A further property is acquired with the intention of becoming an FHL but before it is let expenditure is incurred on items, in respect of this second property, which are eligible for capital allowances.

At what point can the expenditure incurred on the second property be claimed? Would it be treated as being part of the exisiting FHL business and therefore claimed at the point it is incurred or would it have to be claimed when the second property commences to be let - as if it is pre-trading expenditure?

2. Two properties are trading as FHLs. One of the properties ceases to be rented for an 18 month period whilst renovations are carried out. Items of expenditure which qualify for capital allowances are incurred during that period. Once the renovations are complete the property recommences letting as an FHL and qualifies as such in the first year of reletting, how should the expenditure be treated?

I would be very grateful for any responses.

Thanks

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18th Oct 2011 10:43

Claim when incurred

It is not my particular area - and hopefully, others more expert than I will respond - but I think that as there is a existing continuing FHL property business in both cases, you can claim the expenditure (and capital allowances where appropriate) on the other property when it is incurred.

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By plummy1
26th Oct 2011 10:11

Furnished Holiday Lets

This is my opinion:-

1) A property does not become a furnished holiday let unless it meets the minimum qualifying criteria of being available to let for 140 days in a year, let for 70 of those days and normally with no let longer than 31 days. Therefore until these criteria are met in your clients financial year capital allowances cannot be claimed on the property.

Don't forget that with your clients original property there will be the potential to make a capital allowances claim based on its original purchase value. This may be worth while if the purchase value was over £250k as some 25% of this value will be claimable in capital allowances.

2) I believe the above will apply to the second scenario  also in that the expenditure can be claimed once the furnished holiday let meets the qualifying criteria.

 

Where it is an FHL business you can aggregate the qualification criteria across the properties so if one of your clients properties was available to let for 280 days and let for 140 days in the year he could use this to qualify a second property which had not been let at all because of renovations etc.  

 

I hope this makes sense. If you want a more detailed answer I can get it for you as we work on a regular basis with experts in this field.

Regards

John

 

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