Capital expenses from letting out a property

02/05/2019 15:37:19
Dear HMRC,

My husband and I recently bought a small property to use as a holiday rental on the proceeds of an inheritance and some of our own savings. We are both self-employed in small businesses in other fields so know how to complete self-assessment tax returns. However, we have questions about specific areas regarding the holiday let:
[list] Does the property itself count as a capital asset? e.g. as cars, machinery would normally?
If so, what happens when we eventually sell it?
We have spent several thousand pounds setting up the property for rental but have no income from it in the 2017-18 tax year. How do we enter this on the property section of the tax return as it seems only to allow for income? How do we offset these expenses against this coming year's tax liability when, hopefully, we will have received some rental income?
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Re:Capital expenses from letting out a property

03/05/2019 07:11:17
Hi Maggie,

Thank you for your question.

The holiday let that you have purchased is classed as a capital asset and as such you may be liable to Capital Gains Tax on any gain that you make when you sell the property.

More information can be found at:

HS253 Furnished holiday lettings (2017)

When you are completing your Self Assessment return for 2017-18 you will show your rental income as nil and also show any expenses that you have incurred.

This will result in a loss to be carried forward to 2018-19 and you should show this in the ‘Any other information’ box in the property income section of your return.

When you complete your 2018-19 return you will show this in the box ‘Loss brought forward used against this year's profits’

I hope this helps.