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  • Tax

    CGT on BTL converted to holiday let

    Is it possible to make some of my BTL properties into holiday let’s to pay less CGT?

    I see a lot of Airbnb flats in some ex council areas which makes little sense.  They are cheap and probably comply with all holiday let rules but I don’t see them as great money spinners!

    are landlords changing their BTL to airbnbs, running them for a year then selling but paying only 10% CGT assuming they are eligible for entrepreneurs relief?

    I am selling at least 25 pre s24 and this technique would save me a lot of money.

     Thanks for reading and appreciate good advice

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    I’m interested to know this also in relation to HMOs ie can  I recalculate rents into nightly rates and rent them via Air bnb as I currently charge all inclusive rents anyway ie inc bills etc

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    Found this article written by Which. Seems as if the answer is no for both of us!

    https://www.which.co.uk/news/2017/07/cou...ge-lender/

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    Hi Sharon

    I wouldn’t let lender permission put you off, if in the unlikely event they did find out and your loan was called in, your Airbnb trick will have hopefully reduced your cgt as per the plan. We want to sell anyway!


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    A good way to reduce your cgt bill is to become non uk resident.You can then rebase from 2015 and pay cgt from gains occurring from 2015 onwards.Mark Alexander on Property 118 deals with this in detail.

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    Hi Bill

    I was non resident for 5 years previously and stupidly came back, I even had my American green card!!!!!

    trouble was I got bored and although I have itchy feet again, I am thinking 6 months here and 6 months travelling; basically summer here and winters abroad.

    thanks for the suggestion though


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    Lots of views but very few opinions, anyone know anything about this strategy?

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    In theory it works if you have one property which qualifies as a FHL. If you had more than one (but were only selling one) you wouldn't be selling a business, just an asset of the business so ER not available.

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA

    Thanks for your reply Debbie

    I have been running one as a FHL for 2 years (formerly a BTL) and have three others that would be well suited to becoming FHL.  If I make all three new ones holiday let’s then when I sell, I would need to sell all four at the same time, am I following you?

    Is there a specific time period they need to be FHL before selling?

    much appreciated

    ken

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    They need to be FHL for at least 12 months. 

    You either need to sell altogether or cease the FHL business (so change the rest to ASTs) and then sell any of then within the 3 years after cessation.

    Deb

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA

    Amazing, this will save me at least £100k ? definitely worth changing a few sheets!

    thanks Debbie

    ken

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