Question: I have a fully furnished property in France that I let to holidaymakers. I want to sell it and have been told that there are some tax advantages I can get if I sell before 6 April 2010. What is this all about?
© Merrily Harpur
Answer: A If you are a UK resident now is a good time to sell. Provided your French property is a furnished holiday let, tax advantages that before applied only to UK furnished holiday lets now apply also to properties within the European economic area.
To be a furnished holiday let you must let your property commercially, that is intend to make a profit, and so letting it to friends who pay you something for the privilege of staying there doesn’t count; the property must be furnished and available to the public for a minimum of 140 days a year and must be let for periods totalling 70 days but must not be let to the same person for 31 days or more.
When you sell a property you are liable to capital gains tax on any profit made, which is usually the difference between the cost of the property and the sale proceeds, and the gain is taxed at 18 per cent after any allowable exemptions.
However, if the property is a furnished holiday let it is taxed as a business asset and the rate for capital gains tax is not 18 per cent but 10 per cent and so there is a saving of eight per cent.
Do remember this rule applies only for this tax year and so the sale of your French property must be concluded before 5 April 2010 to take advantage of this rule.
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Fiona is a partner in the property team at Thring Townsend Lee & Pembertons Solicitors www.ttuk.com.