Owners of furnished holiday lettings have enjoyed tax advantages over other property investors. The rules mean that if your holiday home let makes a loss you can offset it against other income to reduce your tax bill. When you come to sell it you can sometimes take advantage of capital gains tax relief.
The previous government announced in the 2009 budget that these concessions were to be withdrawn, much to the disappointment of many people who had bought holiday homes in the hope of enjoying family holidays and tax breaks as well. In the recent budget the Chancellor scrapped the repeal of the furnished holiday letting rules but he said he would consult on changes to come in to effect in April 2011. Experts think he might tighten the rules so for example the property may have to be let for more of the year.
Few people go into the property or holiday home market for tax reasons so changes to the tax regime may not make too much difference to prices.
Some holiday owners may not realise that a standard home policy is not suitable for a holiday home that is let out to tenants. It is best to purchase specialist insurance for holiday homes for your property as it will cater for property located in the uk or overseas.