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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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My husband and I own two properties that are not our main

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Hello, my husband and I own two properties that are not our main home. One is a holiday home mainly for our own use but we do rent it out to cover bills. This property does not qualify as a furnished holiday let and doesn’t attract the same tax breaks as a FHL but we declare the small net profit on our self assessment is ac returns in an even 50/50 split. We plan to retire into this property in the future. However, the other property we own is a furnished holiday let and I have ran it as such for 6 years. It meets all the criteria of a FHL and makes a good income. I declare the total net profit for this on my tax return as spouses can choose the proportion of profits for FHLs each receives and as it’s my only source of income and I do the housekeeping, arrange maintenance, arrange welcome packs/supplies etc I claim 100% of the profit. We are considering selling the furnished holiday let and have been advised we can claim entrepreneur’s relief as it’s a single FHL and we don’t have a portfolio of a FHLs. Is this correct? As I said the other 1 bed property we have isn’t run in the way my FHL is as it’s our second home and as such doesn’t qualify under the FHL HMRC criteria and is declared on a different section of the income from property pages of the self-assessment tax return. I do not do cleaning etc at that property and it is completely separate to the FHL I run and mainly used by us. Many thanks.

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

The disposal of this property would attract Entrepreneur's Relief (ER) which would reduce your Capital Gains Tax (CGT) to a flat rate 10%. As this is jointly owned with your husband the gain would be half each and you both have an Annual Exempt Amount (AEA) of 12.3K to offset gains. ,

Customer: replied 11 days ago.
Many thanks. Does this mean that we each separately declare 50% of the capital gains from the sale after allowable expenses are deducted and each request ER? My husband has never declared turnover income from the FHL but I can prove I have declared the full net profit. Does this effect the 50/50 declaration upon the sale as I've always declared 100% of the profit? Thank you.

You each claim ER from your share of the gain.

Customer: replied 11 days ago.
Many thanks

Delighted to have been of assistance.

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