Silverlake

Everything you need to know about furnished holiday lets (FHL)

Property offers a sound opportunity for investment and the financial benefits of choosing to include a furnished holiday let in your investment portfolio are substantial.

 

From the considerable tax savings to the opportunity to generate a passive income, a furnished holiday let brings many rewards. However, it’s important to understand that there are some specific rules and regulations you’ll need to adhere to along the way.

What is the criteria for a furnished holiday let?

 

If you’re planning to use an investment property as a furnished holiday let, you must keep in mind two key criteria:

  1. You must actively market and let the property with the intention of making a profit
  2. You must ensure the property is fully-furnished and well-equipped, with adequate services available

How many days do you need your holiday home let out for it to qualify for a furnished holiday let?

To use your holiday home as a furnished holiday let, you’ll need to hit certain quotas when it comes to how many days you let the property out. While the criteria might seem complicated at first, don’t worry; it soon becomes second nature. Better still, when you invest in a property at Silverlake in Dorset, you can take advantage of the Habitat Escapes Homeowner Service, designed to make meeting the necessary criteria effortless and straightforward.

Open plan lounge and dining area looking out onto a field

Property: Wakeling Island 4

To qualify for a furnished holiday let, your property must be available to guests for at least 210 days each year. Out of the 210 days you have made your property available, it must be rented out by guests for a minimum of 105 days. Finally, in order to qualify, your holiday home must not be let to the same person for more than 31 days at a time.

It’s important to bear in mind that the time you and your family spend at the property does not count towards any of these totals.

What are the benefits of having a furnished holiday let?

 

Open plan lounge and dining area with blue sofa and coffee table

Property: Overton Island 23

A furnished holiday let can bring considerable tax benefits if you meet the necessary criteria. Provided you qualify and meet occupancy requirements, your holiday let will be treated as a business for tax purposes. This means you can deduct the cost of your mortgage interest from the revenue generated. You’ll do this regardless of any other income too, with taxpayers on a higher rate often seeing substantial reductions on their income tax bill as a result.

Here are some more of the benefits that could come with having a furnished holiday let:

Capital gains tax relief

When property meets the criteria of a furnished holiday let, it becomes classed as a business asset and as such may be transferred to future generations without incurring a capital gains tax liability.

Capital gains tax relief when you sell your holiday let

Holiday homes at Silverlake are designed to provide an asset and a joy for generations to come. However, running your property as a furnished holiday let means you will see certain Capital Gains Tax reliefs if you do ever choose to sell. These include Business Asset Disposal Relief, Business Asset Rollover Relief and Gift Hold-over Relief and it’s worth noting that none of these benefits apply to long-term rental properties. If you do come to sell your Silverlake property, the holiday home resales team can help.

Wakeling Island 4 holiday home from the outside, next to the water

Property: Wakeling Island 4

Capital allowances and deductible expenses

Unlike long-term rental properties, furnished holiday lets allow you to claim capital allowances on furniture, furnishings and equipment purchased for your property. Things like cleaning products, maintenance costs and even your travel to and from the property can be classed as expenses too. These capital allowances can significantly reduce the tax payable on your furnished holiday let profits, bolstering your return on investment.

A white kitchen with marble worktops, grey cupboards and hanging lights

Property: Beaumont Village 27

Tax advantaged pension contributions

The income generated by a furnished holiday letting is classed as ‘relevant earnings’ by the HMRC, so you can make tax-advantaged pension contributions on the revenue. This means some of the tax that would usually go to the government makes its way into your pension pot instead, boosting your savings for the future.

Business property relief

In certain circumstances, furnished holiday lets could qualify for business property relief that will reduce the amount of inheritance tax payable, should the property be transferred in either your lifetime or in the event of your death.

Split profits between owners

Unlike long-term rental properties, which see profits distributed in line with the ownership split, the profits from furnished holiday lets can be flexibly and strategically distributed between joint owners to allocate profits to the lower earner.

Get started with your own furnished holiday letting business

 

Getting started with your first furnished holiday let is an exciting time, but one which can also see some nervousness. Doing the necessary marketing required to reach the occupancy levels of furnished holiday let criteria can be costly and time-consuming and the day-to-day running of a holiday let can be difficult if you aren’t in the area.

At Silverlake Estate, we take the hard work out of owning a holiday home, leaving you free to focus on the revenue it generates and the pleasure it brings to your own family and friends.

A bedroom containing a bed with a pink bedspread and towels on top

Property: Overton Island 23

Choose a Silverlake Estate property and you’ll enjoy a professional, tailored service. We’ll guide you through every step of the process, from answering your questions pre-purchase, right through to arranging for our Habitat Escapes Homeowner Service to help remove some of the traditional headaches that can come with renting a holiday home.

The Habitat Escapes Homeowner Service covers elements including marketing and exposure of your property locally and nationally, administering bookings, communicating with your guests on your behalf, handling complaints and damage claims, meet and greets, on-site support and a 24/7 on call service, property maintenance and much more. We created it to make owning a holiday home at Silverlake Estate nothing but a pleasure, and it is the most effortless way to make sure all of those furnished holiday let rules and regulations are met.

To find out more our about holiday homes for sale in Dorset or for help navigating the world of holiday home resales, get in touch with our property team today. You can contact us via our contact form, or call 01305 853490 to speak to a member of our knowledgeable team.

SHARE OUR NEWS