As per the new regulations, there are additional taxes on buy to let properties.
They hit landlords heavily because many items are no longer tax-deductible. Also, the reduction in tax breaks as it is making traditional buy to let less attractive.
Landlords who have recently completed their tax returns must have started to feel the changes. Additionally, this will be more apparent in the future as the full impact of the mortgage interest tax relief comes into place. Taxes are going to be heavier in comparison for higher income earners.
You can act and avoid the implications of this punitive tax by diversifying your portfolio with holiday rental investments.
To convert an existing property into a holiday let, you need to completely redecorate it and furnish it to a standard expected of a holiday apartment. Read more: Bills included rent
Many hands-on investors are thrilled by this news and have been converting some suitable properties within their portfolio to holiday lets. However, not all landlords may benefit from having properties located along the coast or in busy tourist cities. Assured Shorthold Tenancy
Don’t let the idea of short-term lets, managing to advertise through Airbnb and the frequent cleaning dissuade you. In fact, the good news is that some holiday rental properties are available to purchase within a resort with on-site activities and watersports which will increase occupancy and come fully managed. What is rent to rent
Capital allowances are available on furnished holiday lets.
This means that investors can possibly maximise their income. Instead, this is unavailable for traditional buy to let properties. Also, there is also mortgage interest tax relief that is applicable. This means that investors will virtually pay no tax for the first four years of the investment.
For example, someone who invests in a £225,000 furnished holiday let can claim £63,113 in capital allowance. What happens at the end of a tenancy
Other benefits include the unit being fully managed.
This means that investors will not have to worry about finding occupants and managing letting the holiday home in due course.