Holiday let development

by **deltaforce1** on Thu Dec 15, 2011 1:56 pm

Are there any tax advantages for developers?

by **section 44** on Thu Dec 15, 2011 2:21 pm

You'll need to explain a bit more

by **deltaforce1** on Thu Dec 15, 2011 4:14 pm

For example say that I purchase a building plot in Bournemouth on the south east coast and build a dwelling suitable for a holiday let. When I sell the dwelling realising a profit an i defer that tax liable on that profit?

by **deltaforce1** on Thu Dec 15, 2011 4:15 pm

deltaforce1 wrote:For example say that I purchase a building plot in Bournemouth on the south east coast and build a dwelling suitable for a holiday let. When I sell the dwelling realising a profit *an i defer that tax liable on that profit?

*CAN

by **section 44** on Thu Dec 15, 2011 4:23 pm

No, the trading profit would be taxable. The nature of the property is irrelevant.

by **deltaforce1** on Thu Dec 15, 2011 5:03 pm

so how can i structure it so that when i do sell the dwelling i can defer tax? How about if i rent it out for a year as a holiday let?

by **mullet** on Thu Dec 15, 2011 7:18 pm

In tax-speak you should say profit rather than gain. If you have a property which qualifies as a furnished holiday let and thus a business asset, if all qualifying conditions are satisfied you could claim rollover relief if you invest in a new asset within the time limit. But beware - you don't have to invest just the gain to get full relief; you have to invest at least the full disposal proceeds. So whilst you would not pay any CGT on the disposal, you would have no money in your pocket from the gain.

And rollover relief only defers the CGT - the cost of the new asset is reduced by the amount of the gain, meaning that a greater gain will arise on that second disposal. CGT is currently at 18% or 28%, but who knows when or how that might change? That is a risk of rollover relief - CGT may arise in a later year at that year's rate, whatever it is.

by **mullet** on Thu Dec 15, 2011 7:20 pm

In tax-speak you should say profit rather than gain.

Should be "in tax-speak you should say gain rather than profit". Doh wrong way round, must check properly before posting. You said profit on sale. Profit (or loss) would arise on letting income. A capital gain (or capital loss) is made on disposal.

by **deltaforce1** on Thu Dec 15, 2011 9:23 pm

Thanks Mullet,

What are the qualifying conditions of a furnished holiday let?

How about if lease the dwelling to a tourism management company, and receive a guaranteed rental income, while they run it as a furnished holiday let. Does that meet the qualifying conditions?

How long do I need to own the holiday let before I can sell and defer tax?