Holiday Let - Good Investment?
Discussion
So I'm looking for a new medium / long term investment, ideally one that will help fund early retirement via a lump sum or regular income.
I'm drawn towards property rather than the shares primarily because I understand the market a better. I've already got one residential buy to let and the obvious option would be to get another, but I would be keen to hear peoples experiences of owning a holiday let - apart from the obvious bonus of being able to use it from time to time (at off peak times no doubt), do the figures make any kind of sense?
Primarily thinking UK, but no particular thoughts on where...
I'm drawn towards property rather than the shares primarily because I understand the market a better. I've already got one residential buy to let and the obvious option would be to get another, but I would be keen to hear peoples experiences of owning a holiday let - apart from the obvious bonus of being able to use it from time to time (at off peak times no doubt), do the figures make any kind of sense?
Primarily thinking UK, but no particular thoughts on where...
UpTheIron said:
JumboBeef said:
I used to own two holiday cottages. You can make good money but it is very hard work!
JB - was this in the UK? Did you do all the management yourself?A nice earner from Easter to Oct, plus Christmas and New Year. Other times, just broke even really. We did week long breaks and short breaks (F-M and M-F). What sort of holiday let are you thinking of?
As Wings say, the tax rules for assessing profits and losses from UK Holiday Lets are changing on 6 April 2010.
Before that date, Holiday lets are taxed very similar to a sole trader business.
After that date, they will be taxed just like any other buy-to let property.
There are major Capital Gains Tax implications in this change.
Before that date, Holiday lets are taxed very similar to a sole trader business.
After that date, they will be taxed just like any other buy-to let property.
There are major Capital Gains Tax implications in this change.
The bigger your deposit the more likely the business would be viable. Also the more bedrooms you have in a holiday let allows your prices to rise, maybe two families together in a five bed house. As Eric said the key difference is the new tax rules that mean if you make a loss then you cannot have your other incomes taken into account. You can of course roll losses forward.
So how much could you make? A three bed property could net you £12,000 a year in a good area, compare that against running costs, who know how big your mortgage is? And you will see how it stacks up. You have to pay to use your own property so as long as it is in a place you would have visited then it has a value.
So how much could you make? A three bed property could net you £12,000 a year in a good area, compare that against running costs, who know how big your mortgage is? And you will see how it stacks up. You have to pay to use your own property so as long as it is in a place you would have visited then it has a value.
I wonder if there will there be tax cases debating whether a property is a holiday let or a remotely managed hotel/motel?
And I wonder how they will discriminate between the two types of activities.
Obviously, running a commercial hotel/motel/guest house is a proper commercial trading activity and will still be treated as such - with all the tax breaks that go with that.
Having a property available for third party holiday makers to use may or may not be a holiday let and may or may not fall into a commercial activity or a rental property.
I forsee trouble ahead for HMRC in certain situations.
The whole point of the special treatment afforded to UK Holiday lets was to remove tax discrimination between commercial hotels and guest house and those who let their property/properties to holiday makers. Labour have now re-introduced this tax discrimination.
And I wonder how they will discriminate between the two types of activities.
Obviously, running a commercial hotel/motel/guest house is a proper commercial trading activity and will still be treated as such - with all the tax breaks that go with that.
Having a property available for third party holiday makers to use may or may not be a holiday let and may or may not fall into a commercial activity or a rental property.
I forsee trouble ahead for HMRC in certain situations.
The whole point of the special treatment afforded to UK Holiday lets was to remove tax discrimination between commercial hotels and guest house and those who let their property/properties to holiday makers. Labour have now re-introduced this tax discrimination.
Eric Mc said:
I wonder if there will there be tax cases debating whether a property is a holiday let or a remotely managed hotel/motel?
And I wonder how they will discriminate between the two types of activities.
Obviously, running a commercial hotel/motel/guest house is a proper commercial trading activity and will still be treated as such - with all the tax breaks that go with that.
Having a property available for third party holiday makers to use may or may not be a holiday let and may or may not fall into a commercial activity or a rental property.
I forsee trouble ahead for HMRC in certain situations.
The whole point of the special treatment afforded to UK Holiday lets was to remove tax discrimination between commercial hotels and guest house and those who let their property/properties to holiday makers. Labour have now re-introduced this tax discrimination.
unless you can show that you are a 'proper hotel' there are clauses that if you want to attempt to bolt on services to a holiday rental you have to show the two income streams separately, I think they are ready for those who throw in a 'what to do today' phone in service and then claim all rental as a trade.And I wonder how they will discriminate between the two types of activities.
Obviously, running a commercial hotel/motel/guest house is a proper commercial trading activity and will still be treated as such - with all the tax breaks that go with that.
Having a property available for third party holiday makers to use may or may not be a holiday let and may or may not fall into a commercial activity or a rental property.
I forsee trouble ahead for HMRC in certain situations.
The whole point of the special treatment afforded to UK Holiday lets was to remove tax discrimination between commercial hotels and guest house and those who let their property/properties to holiday makers. Labour have now re-introduced this tax discrimination.
arfur said:
I have an investment property in barbados. The income from holiday lettings pays for everything and leaves a profit. There are good deals out there still, even just in land buying. I am saving to buy another piece of land to sit on...
my 10p
I'd be very interested to hear about this, as it is something I am considering.... There's sooo many ''just put a grand down and watch the cash roll-in'' type offers out there but I would be very wary of those, they just scream SCAM at me.my 10p
I love the caribbean and think that flights are reasonable if you avoid peak times. That still leaves plenty of opportunity to enjoy the place.
If I was to do so, I would look at land or a small cottage/unit somewhere where BA or VA fly direct as LIAT transfers can be expensive. With the $ expected to stregthen further in the short term, there's worse places to store wealth, just wish I got off my backside and did it two years ago, the profit from the currency pair alone would have been delightful! What is it they say about hindsight again.....?
My Mother has built-up a bit of a portfolio in Tuscany, though she bought when the exchange rate was MUCH kinder. It has been good and bad, some years more than wash their face others dont. If you're not/ cannot going to be there to service the place, you must be prepared to pay somebody to change sheets and towels etc, this is very valuable if you find the right person/organisation!
With the £ getting hammered vs the Euro the last year has been terrible for people booking from the UK which was the main source of bookings, but they have had bookings from Australia, south Africa and all over Europe, but oddly enough the exchange rate has worked in her favour as the real value of the house she now wants to sell has gone up dramatically. Sometimes she's been lucky with a booking for four months straight through winter/spring, but you have to be prepared for very quiet times if the weather is seasonal. That's why the Caribbean appeals - it has only 3 months when the weather is iffy and leaves much more time for you, the owner, to enjoy it and not be losing peak-season income!
Most of the UK hot-spots in Devon and Cornwall are very pricy indeed, just look on rightmove at what £300K gets you (or doesn't get you) in Salcombe or Padstow for examples!!
Check out Mums site www.hiddentuscany.com if this region appeals to you !
HTH - Nick
With the £ getting hammered vs the Euro the last year has been terrible for people booking from the UK which was the main source of bookings, but they have had bookings from Australia, south Africa and all over Europe, but oddly enough the exchange rate has worked in her favour as the real value of the house she now wants to sell has gone up dramatically. Sometimes she's been lucky with a booking for four months straight through winter/spring, but you have to be prepared for very quiet times if the weather is seasonal. That's why the Caribbean appeals - it has only 3 months when the weather is iffy and leaves much more time for you, the owner, to enjoy it and not be losing peak-season income!
Most of the UK hot-spots in Devon and Cornwall are very pricy indeed, just look on rightmove at what £300K gets you (or doesn't get you) in Salcombe or Padstow for examples!!
Check out Mums site www.hiddentuscany.com if this region appeals to you !
HTH - Nick
With the changing tax rules on holiday lets, then the OP needs to consider both the personal “holiday” advantage and the maintenance costs of a UK holiday let, against a residential let near to his place of residence, and where he could possibly do most of the maintenance work.
I always think of holiday homes as being a bit like “Timeshares”, you commit yourself to a number of years of going to the same place. That thinking I recall was echoed once in a posting on PH on “holiday homes”, where most of the posters said they never ever enjoyed a quite relaxing visit to their holiday homes, without having to spend most of the time carrying out maintenance work. The same resulting in them being all to happy in selling their holiday homes, ending up with either driving or towing their holiday homes behind them.
I always think of holiday homes as being a bit like “Timeshares”, you commit yourself to a number of years of going to the same place. That thinking I recall was echoed once in a posting on PH on “holiday homes”, where most of the posters said they never ever enjoyed a quite relaxing visit to their holiday homes, without having to spend most of the time carrying out maintenance work. The same resulting in them being all to happy in selling their holiday homes, ending up with either driving or towing their holiday homes behind them.
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