Jul

TAX: Landlord’s plan to run rental property while living in van stumps baffled accountants

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One enterprising landlord has fallen down a tax rule black hole while attempting to work out a radical solution to making his property pay.

He wonders if it’s a good idea to buy a holiday let and live in a motorhome, using the property as his address for banking, driving licence and insurance.

After posting on our forum, LandlordZONE has spent a week trying to solve his conundrum – calling on a number of tax and financial consultants – but so far everyone has drawn a blank, either claiming it’s too complex or that it’s out of their area of expertise.

He asks: “Should I register the property as my home and pay residential council tax? If so, can I deduct my council tax and energy bills even though it’s officially my main home?

Capital gains

“And if I do this, would stamp duty be pro-rata when I sell it? If it was actually let for 200 days in the year, then would I pay 55% of the capital gains tax and then deduct 55% of the council tax as an expense and whatever energy I can reasonably claim was for business purposes?

“Should I try to register it as a furnished holiday letting, as I would be able to deduct the cost of any furniture and the stamp duty would be only 10% rather than 28%? But is it possible to do this if I don’t own any other properties?”

One landlord on the forum – DoricPixie – reckons that if you are running a holiday let business it wouldn’t be council tax that’s due, but business rates.

He adds: “Depending on the council, they might be clamping down on holiday lets and short-term rentals in the area so you’d really need to investigate that. You also need to think how you will insure the property. Pretending it’s your main home when it isn’t would likely invalidate any insurance property.”

If there are any tax experts reading this, we’d love to get your views!

Read the forum post in full.

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