New queries, issue 4458

Property priorities

Could a furnished holiday let be treated as a simple residential letting?

Our client owns a property on the south coast of England. For many years it has been rented out to tenants as a furnished residential let. Unfortunately it has made significant losses each year and these have been carried forward. As of the year ended 5 April 2011 the accumulated losses were about £60 000.

With effect from April 2011 the property was let as a furnished holiday letting. This appears to have turned things around and the property now makes a profit of between £3 000 and £4 000 a year.

We have the following questions.

• Can the brought forward losses from the previous residential lettings continue to be set off against the profits now arising from holiday lets?
• Alternatively would HMRC...