Second home owners 'face significant losses' under new regulations

Second home owners will be hit hard by new legislation set to be introduced in the Pre-Budget Report, according to recent reports.

The legislation would affect around 60,000 property owners who let out their second homes for a significant proportion of the year.

Under the furnished holiday letting scheme, income received by landlords renting out furnished holiday accommodation may currently be treated differently for tax purposes from other rental income.

Providing they meet certain criteria, landlords can enjoy a number of tax advantages, including loss relief and capital gains tax relief.

However, the rules are set to be repealed in April 2010 at which point these benefits will be removed.

Experts have warned that the move will lead to significant losses for second home owners, and that it could damage the tourism industry.

The Government has confirmed that draft legislation will be included in the 2009 Pre-Budget Report.