Letting out your second home has inheritance tax benefits

Many second-home owners are unaware that they could avoid paying inheritance tax on their second homes if they let them out as holiday homes.

According to Tony Briscoe from DHC Accounting, second homes are considered as businesses if they are also holiday lets, and this means the owners will not be liable to pay inheritance tax on the property, as long as the owners have had the property for at least two years.

The current economic downturn has meant that more people are considering letting out their second homes for the extra income, says Holiday Cottages group, which claims that 55% of second home owners are now considering turning their homes into holiday lets.

Briscoe says almost any holiday let will qualify for the inheritance tax exemption, he says, “There are certain things you have to do but by and large, any holiday let property should qualify...A lot of these properties are very valuable and the people who own them are wealthy people and if they were letting out these properties as holiday lets, they would qualify as exemption from inheritance tax."