Holiday cottages

[pooh]

I am thinking of buying a cottage in Perthshire (3 beds £200k to £250k )and renting it out as a holiday cottage and I have a few questions.
From a tax point of view can you offset costs such as the mortgage against tax?
I assume I would need some sort of liability insurance to cover me if people fall down the stairs etc.
Is it worth having my own web site or would I get enough business using holiday cottage sites.
Am I correct in thinking that I could get a decent return on my money compared to non holiday rental,the return in terms of rent per week looks very good(£750 per week ish in high season) and it aviods tennants rights issues.
Any other issues I should be thinking about?
Thanks
Robert

[miniandy]

Sometimes it's worth getting an agent to deal with everything for you - someone like Country Cottages in Scotland. You get 4 weeks allocated for your own use, the rest is for them. Could be an option?

[Horse_Apple]

Hi,

I looked into this for onw of our places but I found the hassle of running it myself for such low revenues not worth my time.

What I have since done is a deal with the village pub who have a set of keys and use the property as a premium option for their B&B and we share the revenue plus I get a free slate

Their business insurance covers the deal and their cleaners make sure the cottage is ready for us.

[pooh]

miniandy said:

Sometimes it's worth getting an agent to deal with everything for you - someone like Country Cottages in Scotland. You get 4 weeks allocated for your own use, the rest is for them. Could be an option?

I am quite tempted to try and run it ourselves, my wife does not work and I get about half my time off, so we have plenty of time to do it. The agent option is worth considering though.

[jacko lah]

I've stayed in a few cottages and I always thought that if you have spare capital it's a good investment. I mean £1000 a week must be average for a 4 person cottage (2 beds) which must equate to £10 to £15K a year. If you are going to do it make sure the place is PERFECT. We stayed at one that was just horrible.

[pooh]

jacko lah said:

I've stayed in a few cottages and I always thought that if you have spare capital it's a good investment. I mean £1000 a week must be average for a 4 person cottage (2 beds) which must equate to £10 to £15K a year. If you are going to do it make sure the place is PERFECT. We stayed at one that was just horrible.

Yes you're right, I was thinking the same thing, people paying that sort of money for a week are going to expect a lot and to have any chance that they will come back again, the cottage would have do be perect. We stayed in one in the borders that was a total sh*t hole and it spoiled the holiday.

[miniandy]

As above. Make sure you get it graded by STB or someone and make sure it's mint. Ours was graded with 5 stars and was booked solid. Be aware that cleaning it will be quite tiring unless you get someone in!

[Eric Mc]

Running a holiday cottage is more akin to running a trading activity rather then a simple rental property.

The Revenue therefore expect the tax payer to return the profits or losses derived from the property in the form of a set of business accounts as opposed to rental accounts.

There are a number of different tax treatments between the two scenarios, the most important being the utilisation of losses and the extent to which Capital Allowances can be claimed.

Regarding mortgage repayments, only the "interest" element of the loan repayments can be offset against the income, not the total repayments.
Obviously, if it is an "Interest Only" mortgage, then the repayments weill equate to the interest.

Edited by Eric Mc on Friday 2nd March 14:54

[pooh]

Eric Mc said:

Running a holiday cottage is more akin to running a trading activity rather then a simple rental property.

The Revenue therefore expect the tax payer to return the profits or losses derived from the property in the form of a set of business accounts as opposed to rental accounts.

There are a number of different tax treatments between the two scenarios, the most important being the utilisation of losses and the extent to which Capital Allowances can be claimed.

Regarding mortgage repayments, only the "interest" element of the loan repayments can be offset against the income, not the total repayments.
Obviously, if it is an "Interest Only" mortgage, then the repayments weill equate to the interest.

Edited by Eric Mc on Friday 2nd March 14:54

Thanks all.

Edited by pooh on Friday 2nd March 17:40