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PostPosted: December 16th, 2010, 3:50 pm 
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Joined: August 1st, 2010, 7:41 pm
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If you are looking for the section with rental property let by owners please follow this link: http://www.calabriahomes.com/viewforum.php?f=65
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Although the 105 day rule seems tough there is nothing that says what that rental rate has to be (so lets say €1 per day, off-season, to a person or persons who may or may not ACTUALLY take up the holiday, if you see what I mean). It does relate to holiday lets abroad within EU.
Anyway, from today on CityWire:


Holiday Lets: how the new rules work
Although new rules make it more difficult for property owners to qualify for the tax advantages of holiday lets, at least they bring certainty to the market and, hopefully, help stabilise prices.
New 'day count' rules
There is also an improvement in that once a holiday letting business has qualified under the new longer letting requirements, it automatically qualifies for the following two years regardless of how many weeks it is let. The owner may elect to treat the property as continuing to qualify for up to two later years, even though it does not meet the letting conditions. The election has to be made in the first tax year in which the letting condition is not met.
Under the new rules, to qualify for the tax advantages of holiday letting status a property must be available for letting for 210 days each tax year, and actually let for 105 of those days. Under the old rules the qualification was that the property was available for letting for 140 days a year and actually let 70 days a year, so it will be tougher to qualify.
Although the main changes come into effect from April 2011, there is some relief in that the ‘day count’ rules will not take effect until April 2012, which will give people time to consider other options. Some may decide to sell as with a short letting period in the UK it may be too difficult to meet the new requirements. In addition, owners of holiday letting properties will no longer be able to offset losses on the letting business against other income as they have been able to do in the past.
Optimism
Some are, however, optimistic. Andrew Arnott, a partner at accountants Saffery Champness, said that the Treasury proposals were welcome because they, ‘remove the considerable uncertainty that has been surrounding these businesses particularly at a time when the selling market for these properties is so difficult. This proposal should inject some value into the holiday property market.’
He particularly welcomes the option to elect for the threshold occupancy conditions to be carried forward into the following two years once met in one year. ‘This will provide furnished holiday letting businesses with stability over their tax affairs and will allow them to ride over any lean years in lettings that may arise from dips in the economy or other unforeseen "disaster years", such as those seen in recent years due to flooding or foot and mouth disease.’
One in four fail
But Arnott warns that government estimates that a quarter of businesses currently fall short of the revised qualification conditions means that the implementation of the new rules will still have significant effect on a large number of businesses when they do come into force in April 2012.
European angle
However owners of holiday homes abroad should benefit. As Patricia Mock, a director in the private clients practice at accountant Deloitte, points out, ‘the relief will be available for properties within the European Economic Area as well as in the UK. Previously this extension had been on a non-statutory temporary basis.’ But she cautions, ‘it will become much harder to comply with the longer letting requirements, particularly for those who have holiday property in locations with short rental seasons or who want to use their property themselves for some period.’
‘Furthermore, the main change, that losses made by a qualifying furnished holiday lettings business will not be able to be set against general income, will considerably restrict the benefit of falling into the regime. In future, losses will only be able to be set against profits from EEA or UK furnished holiday lettings.’
‘However, other reliefs do remain, in particular entrepreneurs’ relief, which would enable gains within the lifetime limit of £5 million (if available) to be taxed at 10% rather than normal capital gains tax rates of 18% or 28%,’ Mock points out. This means that using a property as a holiday letting business still has significant tax advantages over longer term letting which qualify as buy to let and are subject to CGT at either 18% or 28% on realised profits.


Last edited by admin on March 7th, 2011, 12:27 pm, edited 1 time in total.
added link to lettings section as post scores high in search.


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PostPosted: December 17th, 2010, 12:34 am 
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Location: Carmarthen, south west Wales / Santa Maria di Ricadi, Capo Vaticano
Hi Tim,
Your advice on this matter.
Do these new Holiday let rules really help people like myself who only have one holiday property as a holiday home, letting it out for about 10 weeks in the year and are not in the holiday let business as such.
I understand that the UK has a "Double taxation Agreement" with Italy so we would only have to pay tax on any profit in one country and in our case Italy.
When we declare our rentals to the Italian Tax Authorities we may be taxed on the profits (if any), and also presumably subject to the annual personal tax allowance in Italy.
I believe that we have to inform the UK Tax authorities of the rental profits and the tax paid to the Italian authorities (if any) but will not have to pay any tax on this in the UK due to the taxation agreement.
Is my thinking correct in this?
davidnam


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PostPosted: December 17th, 2010, 11:00 am 
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David - your Holiday Let is now regarded as a holiday let business (previously this was only true on UK holiday lets, but has now been extended to EU plus some other related countries). This means that your property is regarded as a business - and taxed as on earned income, unlike investment business which would be regarded as unearned income. This assumes, in simple terms, that you make the property available for 200-odd days to the general public and actually let the property for at least 105 days. As a business you can only offset any losses against profits or earnings from that business, not offset against your other income. If you only let your property to family and friends or only use it yourself then it is not a business. If it does qualify as a business and your also use it yourself then there is the question of you as income tax payer earning or gaining a benefit in kind. I'm not a tax specialist, you should consult with your accountant - these are new rules and I'm not sure everyone fully understands the impact yet.

David - in your case if you only let your proerty for 10 weeks per year, that is 70 days, then you fall short of the qualification of 105 days that would deem your property as a business.


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PostPosted: January 4th, 2011, 1:20 pm 
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It seems the pound is on the up this year against the Euro, after going way down at the end of last year.


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PostPosted: January 29th, 2011, 5:08 pm 
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Location: Carmarthen, south west Wales / Santa Maria di Ricadi, Capo Vaticano
Just read this article re claiming tax allowance against UK income.
Does anyone have experience about this?

url for the article is : http://www.aplaceinthesun.com/news/feat ... efits.aspx
Copy of article:
Holiday home owners who let out their property overseas could miss out on tax allowances worth thousands, if they do not make their claim before the end of the tax year, according to John Davies, managing director of Hedge Tax Mitigation, niche property tax specialists.

This little known tax legislation permits homeowners of furnished holiday lets, which meet criteria laid down by the Inland Revenue, to offset “Capital Allowances” against their total income from salary and dividends paid in the UK, as well as rental income.

But unless the claim is made before 5th April 2011, the window of opportunity may be shut forever as the Government is thought to be planning to end the ability to offset these tax allowances against income earned in the UK - called ‘sideways relief’.

Davies estimates that over 97 per cent of holiday home owners are unaware of these tax allowances, due to the specialist nature of this area of property taxation, and that millions of pounds remain unclaimed.

The tax benefit could make all the difference to the many owners struggling to keep their homes due to the weak pound and lower occupancy rates.
“It is possible that between 20 and 30 per cent of the purchase price of a property could be claimed as Capital Allowances, which on a property bought for £250,000, could mean a tax saving of £15,000 to £37,500. These are large sums and the owner has an entitlement to claim them,” explains Davies.
He adds: “In these austere times as the government looks to raise revenue, holiday homes, as well as buy-to-let portfolios are coming under the government spotlight. Irrespective of when they bought their property, owners need to stake their claim now before the legislation changes, or this money, which is rightfully theirs, will be lost forever.”

The legislation allows owners to claim tax allowances against items such as electrical cabling, kitchen fixtures and fittings, plumbing, air conditioning, and many other items integrated into the fabric of the building, which will not have been claimed for by their accountant.

It is estimated that over two million British tax payers own holiday homes in the UK and overseas, with the estimated value of British owned properties in the eurozone currently considered to be around £47.5 billion.

Written by: A Place in the Sun Thursday, January 27, 2011

davidnam


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PostPosted: February 6th, 2011, 7:18 pm 
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Location: Carmarthen, south west Wales / Santa Maria di Ricadi, Capo Vaticano
Through experience I am aware that HMRC give quite good allowances to offset rental income eg mortgage interest, insurance costs, 10% of rental income as depreciataion allowance, Capial allowances etc.
Have a look at the HMRC "UK Property notes" This is the URL for the notes.
http://www.hmrc.gov.uk/worksheets/sa105-notes.pdf

This is the URL for the Form to send in your returns.
http://www.hmrc.gov.uk/forms/sa105.pdf

As I understand it if we rent our 2nd home property in Italy we have to pay tax on the income. I think you even have to pay nominal tax even if you don't rent it out.

UK has a "Double Taxation Treaty" with Italy so any tax on rental paid in Italy will not be liable to UK tax. The problem is that I think that the allowances Italy gives to landlords is not as generous as HMRC. I wonder if we can choose the UK HMRC instead of the Italian Tax authorities?
Does anyone know of a Italian accountant who speaks English on the west coast?
davidnam


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PostPosted: March 22nd, 2011, 12:19 am 
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Location: Carmarthen, south west Wales / Santa Maria di Ricadi, Capo Vaticano
I have finally managed to speak to a technical advisor of the HMRC regarding rental income from property in Italy and I set out below what I understood was said.
The situation as outlined above by Tim Jones and City Wire if the property is rented out more than 105 days and is classed as a "business" as opposed to if it is rented out less than 105 days in a year.
I put the scenario to the advisor that I envisaged ie renting for only 10 weeks in the year so not qualifying the rentals as a "business" and using the property myself for family & friends for 4 weeks in the year.
The rental income would have to be declared to the Italian authorities and taxed by them and this will then have to be declared to the HMRC on the annual tax return. If the tax paid to the Italian authorities is less than what the HMRC would have claimed for the amount of rental income when added to your total UK earnings, only the difference will be taxed at your highest rate of tax. The period of time that the property is used by the owner is also taken into account when computing any allowances which will be reduced in proportion to use.
I do like Tim's idea of a nominal rent for a number of weeks to increase the lettings up to the 105 days (16 weeks) in a year and qualifying it as a holiday letting business. One should then be able to claim the full UK allowances eg Capital allowances, mortgage interest, 10% of the rental income as an allowance against the depreciation on furniture, fittings etc.
I will still need to find an English speaking Italian accountant to fill my Italian Tax form. Does anybody know of one on the west coast?
davidnam


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PostPosted: March 28th, 2011, 8:20 pm 
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probably not the write topic for this but here goes anyway.....does anyone know what the ici tax covers,does it cover the removal of garbage or is there a separate tax/charge for the garbage????? :?: :?: :?: :?:


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PostPosted: March 28th, 2011, 8:20 pm 
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probably not the write topic for this but here goes anyway.....does anyone know what the ici tax covers,does it cover the removal of garbage or is there a separate tax/charge for the garbage????? :?: :?: :?: :?:


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PostPosted: March 28th, 2011, 8:36 pm 
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Location: bedfordshire
I'm not quite sure what the ICI tax actually covers but there is a seperate refuse tax. As a rough guide my ICI tax is 60euro & my refuse tax is 30 euro per annum

Paul


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PostPosted: March 29th, 2011, 12:07 am 
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Location: Carmarthen, south west Wales / Santa Maria di Ricadi, Capo Vaticano
The annual taxes of ICI the local property taxes (imposta comunale sugli immobili) and the annual fee TARSU is the municipal solid waste tax (tassa rifiuti solidi urbani).
Yes Tonymccready this is the wrong thread for this topic !!
davidnam


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PostPosted: March 29th, 2011, 5:33 pm 
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oooh errrr!!!!


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PostPosted: March 29th, 2011, 5:33 pm 
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oooh errrr!!!!


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