Tax corner

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Tax corner

When renting out your holiday home it is vitally important to ensure you are paying the correct tax, both at home and in the country your holiday home is based.

You must make sure that you are tax compliant in all relevant tax jurisdictions affected by your property and are aware of all the specific tax information and deadlines that will affect you.

Be sure to talk to a specialist about it in order to reduce your tax exposure and finance costs.

Please follow the links below to find out more detailed information.

Homes in the UK and Ireland

In the UK, your home may be considered a Furnished Holiday Letting for tax purposes, which will have specific tax implications for you. The Furnished Holiday Lettings Consultation which took place in 2010 has led to certain changes in the rules which will be applied from April 2011, with some changes only beginning to apply from April 2012.

If you own more than one home and decide to sell one, you may be able to benefit from capital gains tax relief, which applies to holiday letting accommodation, buy-to-let investments and private homes.

Owners of second homes in Ireland should be aware of the annual property tax announced in October 2008, which applies to owners of second homes, regardless of whether they rent their property out or not.

Taxes for Italian homes

Similarly, owners of holiday homes in Italy will need to pay certain taxes on any homes, rented or otherwise, and regardless of where your permanent country of residence is. You should of course speak to a professional with knowledge of both the Italian and British taxation systems.

Spain: resident or non-resident?

If you own a home in Spain you will need to be aware of whether you are considered to be a resident or non-resident, as this will have certain financial implications for you. For non-residents, there are specific taxes that will apply to you.

French taxes

Taxes will apply if you rent out a holiday home in France, irrespective of where you are resident, although the level of the tax will vary. It is important to be aware which category of rental income tax will apply to your property.

Remember... get some advice!

No matter where you are based and wherever your property is, you should always consult a financial advisor who is knowledgeable about taxes in all the relevant countries in order to make sure you are complying with all the rules that apply to your situation.

Disclaimer: Holiday Lettings is not a financial advisor or accounting firm and does not offer formal financial or tax advice. You should consult your financial advisor and/or accountant before acting on any of the information or services presented above.

Property tax specialists Hedge Tax Mitigation, will provide a free illustration for you on tax reliefs or return for which you may be eligible. They will work with your accountant to help you claim what is rightfully yours. They can also help you claim tax relief on trading profits for the last four years.