second home let out -F&F

second home let out -F&F

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just want to sense check this.

client buys a second home.  it is purchased as a holiday home for the family and occasssional letting

he spends a significant amout renovating

he spends a significant amount on furniture, curtains, paintings and expensive rugs etc.

he lets the house to holiday makers during 11/12 for only 8 weeks (through choice)

because it is not an FHL, I assume it is just therefore income from a normal property business

so - no allowance for CA's  + 10% WTA only (or replacement method if chosen)

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By Eddystone
24th Jan 2013 10:19

You're probably right

I tend to agree with what you say, as it probably does not meet the 'number of weeks let' (forget offhand what that is) requirement for FHLs.

However, if this were the first year and it wasn't available for the full year, you could presumably pro rata the number of weeks. 

Was it also let in the current year ?  If it were let for sufficient weeks this year you could argue that last year was the first year and couldn't be expected to have many bookings.

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By blok
24th Jan 2013 11:53

.

thanks Eddystone

I hadn't appreciated the first year pro rate point.

some more facts

the property was not avaialble to let for the full year because of (i) 6 weeks of private occupation and (ii) its lets were restricted by the owner to only 8 weeks through choice because he didn't wish to trigger VAT registration. (the weekly let is 8k per week!, (its very big and nice))

im starting to wonder if VAT would be benficial.  The vat on the renovation was at zero rate (approved alterations to protected building) however the vat on the fixtures would not have been recovered. 

I suppose he could now voluntarily register for vat (although he has said he wasn't keen on that idea) recover the vat on the paintings/curtains etc and he coudl increase the number of weeks let by one or two to recover the cost of the output vat. 

But, is this really a "holiday business" he doesnt really wish to make a profit, he simply wants to recover some of the costs of having the building (1.5 staff, energy etc)

This is growing arms and legs - I am now going to speak to our vat guys.

 

 

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By JimH
24th Oct 2013 07:26

No first year pro rata for FHLs
See Helpsheet 253 page 3 http://www.hmrc.gov.uk/helpsheets/hs253.pdf

FHLs must meet the tests for a 12 month period before they can qualify for FHL treatment from start of letting. A clear example is given on page 3 of HS253.

Sorry, I'm late to stumble on this thread.
Jim

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