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Posted Sun, 13 Feb 2022 20:37:36 GMT by Michael Street
My wife and I started our FHL on August 15th 2020. I understand (I’m sure I read it here somewhere) that to benefit from the special tax benefits we must operate it for 3 years. If I am correct, would that be 3 years from that date or do tax years come into play? If we operated it until sale, what is the earliest date a sale could be completed to maintain the tax benefits?
Posted Mon, 14 Feb 2022 11:42:05 GMT by HMRC Admin 17

Hi,
 
Thank you for your question.

You may wish to read HS 253 which is available on www.gov.uk.

Thank you.
Posted Sun, 20 Feb 2022 18:55:41 GMT by Michael Street
I read HS 253 before posting my question as the answer isn’t in it as far as I can see. Please could you look again at my precise questions? If we operate the house as a FHL for at least 3 years do we avoid HMRC reassessing our tax liability? If so, is the 3 years calculated from August 15th 2020 or another date related to tax year dates? Thank you.
Posted Mon, 21 Feb 2022 15:43:40 GMT by HMRC Admin 18
Hi,

There is nothing specific to FHLs and a requirement to operate for three years.

Please refer to HS253:

HS253 Furnished holiday lettings (2021)

Also please see PIM4140:

Property Income Manual

Thank you.


 
Posted Mon, 21 Feb 2022 15:56:24 GMT by Michael Street
Thank you. Must have seen something about the 3 years minimum and transferred it to the FHL situation. Will try to fathom out what on earth it could have been.
Posted Tue, 22 Feb 2022 12:41:35 GMT by Bella Boo
For clarity, are you asking about the special rules for taxation of the rental income from the FHL? Or the taxation of the gain from disposing of the property once the FHL ceases? I ask because the 3 year rule you refer to is applicable to BADR. Which would only potentially apply when disposing of the property. Hope the above has helped (I'm not hmrc)
Posted Tue, 22 Feb 2022 13:37:47 GMT by Michael Street
Thank you. That was probably what I came across when I was looking up as much information as I could when we set up 18 months ago. I will follow that up. We have owned the property for nearly 11 years so probably VERY complicated as we have only let it since August 2020.

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