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Second property tax basics

28th Jul 2021 | Tax

Second property purchases in the UK have boomed according to government figures, with second home sales rising 30% over the past five years.

The recent Stamp Duty holiday has further increased activity in the housing market, as people look to benefit from this short-term tax concession.

Second home-owners include those buying a property to rent out, either as short-term holiday lets or on longer-term rental contracts, as well as those buying a property solely for their own use. Many will do a bit of both: using a second property for weekends away, while also letting it to friends, family and also commercially for some of the year to help cover costs. However, this can affect how much tax you need to pay on any income the property generates.

  • Homes that are classed as a ‘furnished holiday let’ (FHL) benefit from several extra tax breaks.
  • Owners can deduct as expenses the cost of furnishing the property and mortgage interest charges.
  • Income from FHLs can be used to make pension contributions, which is not permitted for income from buy-to-let property.
  • To qualify, it must be available for letting at a commercial rate for at least 210 days a year
  • And it must not normally be let to the same person for a period of more than 31 days in the tax year.

If you are renting out a second property, a financial adviser will offer tax advice to ensure you make the most of the rules. Contact us for more information.

The Financial Conduct Authority does not regulate tax advice. Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances. Tax laws can change.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it. Business buy-to-let and commercial mortgages are not regulated by the FCA. Think carefully before securing other debts against your home.

This post is intended for marketing purposes only and should not be considered advice. 

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