Saturday, 17 October 2015

Going down the holiday home business route?

Investing in second or subsequent property for holiday rental is not as profitable as it seems:
  • you will rent maybe 150 nights a year;
  • holiday rental agencies charge circa 25% of the letting fee;
  • you have to pay council tax/business rates, in our case circa £1200;
  • you have to pay for a TV licence;
  • you have insure for holiday rental, it is higher than normal home insurance;
  • you have to keep the furnishing and property well maintained, redecorated once a year;
  • you have to pay for power, water, unlimited broadband;
  • you have to have the place cleaned throughout at the end of each rental;
  • bed and bath linen has to be laundered after each rental;
  • linen has to be replaced immediately if stained or worn;
  • gas safety checks have to be paid for every year;
  • electric safety checks have to be paid for once a year.

Any remaining profit is taxed as part of your income. I didn't mention the cost of financing the property purchase if you need a mortgage. 

if you sell the place any profit on the sale is subject to capital gains tax.

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