Investing in Furnished Holiday Lets (FHLs) can offer a lucrative opportunity for property owners, but many are unaware of the potential Stamp Duty Land Tax (SDLT) savings and unique tax benefits associated with this type of investment. By understanding the differences between FHLs and traditional buy-to-let properties, investors can make informed decisions and maximise their returns.
Understanding the Difference Between FHLs and Buy-to-Lets
FHLs are properties that are let out for short periods, typically less than 31 days at a time, and are fully furnished. In contrast, buy-to-let properties are usually let on longer-term tenancies, often through Assured Shorthold Tenancy (AST) agreements lasting at least six months. FHLs also differ in that guests generally don’t pay utility bills, whereas buy-to-let tenants often do.
SDLT Rates for Furnished Holiday Lets
While FHLs are subject to SDLT, the rates differ from those applied to traditional buy-to-let properties. The current SDLT rates for FHLs are:
- Up to £250,000: 2%
- £250,001 to £925,000: 5%
- £925,001 to £1.5m: 10%
- Over £1.5m: 12%
It’s essential to note that these rates apply to FHLs listed on popular platforms like Airbnb as well. By optimizing their SDLT expenses and seeking guidance from tax professionals, investors can significantly reduce their tax liabilities.
Qualifying as a Furnished Holiday Let
To take advantage of the tax benefits associated with FHLs, properties must meet specific HMRC criteria:
- Available for short-term lets (31 days or less) for at least 210 days a year
- Actually let out for at least 105 days a year
- Long-term lets (over 31 days) must not exceed 155 days per year
- Fully furnished and intended to generate a profit
Failing to meet these requirements may result in the property being classified as a standard buy-to-let, potentially leading to a loss of valuable tax benefits, such as FHL capital allowances.
Maximising Returns on Furnished Holiday Lets
One of the key advantages of investing in FHLs is the potential to earn higher returns compared to traditional buy-to-let properties. By utilizing popular platforms like Airbnb and Booking.com, landlords can easily list and manage their properties, reaching a wider audience of potential guests.
Additionally, FHLs are not subject to the Section 24 mortgage interest relief cap that affects buy-to-let properties. This means that all mortgage interest on FHLs is tax-deductible, providing a significant financial advantage for investors.
Claim Your Furnished Holiday Let SDLT Refund
Many FHL investors have unknowingly overpaid on their SDLT due to the complexities surrounding this type of investment. If you believe you may have paid too much SDLT on your Furnished Holiday Let, Claim SDLT’s experienced solicitors can help you claim the refund you deserve.
Our team will guide you through the entire process, from assessing your eligibility to preparing and submitting your claim. With our No Win, No Fee service, you only pay if your claim is successful, ensuring you have nothing to lose and potentially significant savings to gain.
Contact Claim SDLT today to discuss your Furnished Holiday Let SDLT refund and take the first step towards maximizing your investment returns.
