I have a client who has a self contained annex to her home which she rents out as a holiday let as well as having B&B in her own home. I assume the annex should be treated as furnished holiday lettings and the B&B treated as a self employed business.
Realise this may sound like a simple question but I just wanted clarification before I started working on the expenses so I can make sure I treat them correctly.
sounds like a CGT nightmare. Hope your clients not planning to sell up anytime soon!
I think that your approach is correct in that you're treating the two entities totally separately.
Just to confirm though, the furnished holiday let is completely separate? Different front door, different address, etc.
I know of one case where someone had a semi detached bungalow and owned both sides so to all intent and purpose although one property they were two separate entities and the one was indeed a furnished holiday let.
If they're actually the same address (perhaps a converted garage) then the separate front door argument should apply but you're then into a nightmare over interest expense on any loans against the property.
You really need a better answer from someone whose dealt with a similar case but here's hoping that my reply prompts some disagreements.
As an addition to the above, this is also probably accountant rather than bookkeeper territory as one is going beyond recording the transactions and really advising the client on tax matters.
cheers,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
As Shaun has said, does the annex share an entrance. A different slant on this is that it is part of the hospitality sector and the annex could just be seen as booked on a room only basis and not a holiday let property, as it is an annex to the main building and not a building in its own right. And, seeing as the main business is B&B, it makes sense to run the two as part of the same business. The you would have no trouble with interest on loan payments etc
CGT is going to apply whatever, as the whole property is used for business purposes.
The annex has a seperate entrance but does not have a seperate address. I live in an area that is full of B&B and holiday let businesses so really need to get my head around tax differences as I am sure that over the next few years I am bound to gain a lot of clients in these businesses. This one caught me out because the self catering business is part of her home and not seperate as most are.
I intend to ask some more questions and do some more digging. But any other comments would be greatfully received.
