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Air BnB as part of a rental portfolio.

Increasing Amount of Mortgage Interest Relief available...

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Client has a rental portfolio of 8 properties = no problem.

Last year they rented out their own property (of which there is no mortgage) as an Air BnB, it was only for 90 days therefore would never qualfy as FHL, they were never present at the time people came to stay (they stayed round the corner at parents) therefore rent a room relief is out of the question.

Mortgage Interest Relief is restricted if the property profit is lower than the finance cost. (lets say the aforementioned 8 rental properties Finance costs = £20k and Property Profit = £15k)

My question is this, HMRC state Air BnB is rental income, can the Air BnB profit (£5k) therefore be used to increase property profit to gain access to more Mortgage Interest Relief on the other Rental Properties?

It just seems a bit wrong but I can find a scenario / example from HMRC that tells me I can't.

Should it be treated as a "separate" Rental Income to the others? 

 

 

Replies (3)

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paddle steamer
By DJKL
03rd Aug 2021 16:52

If it is not a FHL as it does not qualify as such it surely can only be be part of the general property business of your client. (Assuming your client is an individual re all properties and all properties are just owned solely by him or her?)

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Scooby
By gainsborough
03rd Aug 2021 17:05

I would just double check first of all re the point on rent a room relief not being available. ITTOIA 2005 s786 just refers to income being received in the income period and the property being the owner's main residence for some of that period - which it could continue to be even if they stayed else where.

I can't remember if the shared occupancy rules were brought in again after being scrapped from FA2018?

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Replying to gainsborough:
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By Self-Employed and Happy
03rd Aug 2021 17:13

gainsborough wrote:

I would just double check first of all re the point on rent a room relief not being available. ITTOIA 2005 s786 just refers to income being received in the income period and the property being the owner's main residence for some of that period - which it could continue to be even if they stayed else where.

I can't remember if the shared occupancy rules were brought in again after being scrapped from FA2018?

https://www.gov.uk/government/publications/rent-a-room-for-traders-hs223...

Based on point 1, they are renting the entire house not a furnished room, lodger would imply they have a room whilst the owners are present. It also doesn't amount to a trade. On that basis I did not think RARS was applicable.

EDIT: You are right, FA2018 only got to the draft stage of the shared occupancy rules.

Thanks for your help.

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