Furnished Holiday Letting Losses

Furnished Holiday Letting Losses

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I have a client who owns one property on the South Coast.  It had been let for many years as a furnished residential let making significant losses each year which were carried forward.  As of Y/E 5 April 2011, losses were in the region of £60K.

As of April 2011, the same property was let as a Furnished Holiday let & now makes a profit of £3K-£4K per annum.

The question is;  can the brought forward losses continue to be set off against the profit now arising? Or;

Would HMRC claim that the residential rental business ceased in March 2011 effectively meaning those losses are wasted & a new entirely separate trade commenced, i.e., a furnished holiday let?

Although the intention now is to let the property as a furnished holiday let, should it fail to meet the qualifying conditions, presumably it could be treated as a residential let & therefore the brought forward losses could be utilised??  Is the FHL treatment & tax advantages optional?

Replies (3)

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By Steve Kesby
04th Jul 2014 15:41

I'm curious why...

... anybody would copy a question from the Taxation Readers' Forum and post it here?

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Replying to pauld:
Me!
By nigelburge
05th Jul 2014 12:15

Probably.........

.... because the OP is the person who posted it to Taxation and wants as many answers as he can get.

I, for one, would be VERY interested in the answer.

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By Steve Kesby
05th Jul 2014 12:25

Ordinarily...

... where that's the case, one sees the question appear on AWeb around three weeks before it appears in Taxation, rather than on the same day.

It's a relatively straightforward question, to which I have prepared a response, which I hope might be published in Taxation on 24 July.

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