Bentleys are warning those with Holiday homes to be aware of changes in the 2009 Budget which mean the current Furnished Holiday Lettings (FHL) rules relating to relief for losses will be scrapped from next year.
Owners of holiday homes and cottages in the UK currently enjoy numerous tax benefits, but the Budget said that these advantages will be repealed in 2010/11. However, until then the rules will be extended to homes in other European countries.
The Government has now decided to repeal its FHL regulations, as they may not be compliant with European law, but until then the rules will apply to furnished holiday accommodation elsewhere in the EEA.
Mike Turner, partner at Bentleys said “Certain conditions must be met in order to qualify for the tax treatment provided under the FHL rules: 
“The property must be situated in the EEA and the business must be carried on commercially, and with a view to a profit.  The property must be available for commercial letting as holiday accommodation to the public for at least 140 days during the relevant 12 month period and the property must be commercially let as holiday accommodation to members of the public for at least   70 days during the relevant 12 month period”.