Ask Margaret: can I rent my holiday house from myself?

Hi Margaret,

I was wondering, if I buy a house that can be rented out on the short-term holiday rental market, can I, if I wanted to, stay there and rent this back from myself?

Regards,

Scott

Hi Scott,  

The issue of whether you can rent it back from yourself is only one of the many to consider, and when you buy such a property you have to think of them all! Often the ability to get some kind of personal benefit from a property causes investors to buy property which is not in a potentially good area and which, without the benefit of the holiday option would not be a good investment at all.  

Here are some important points:

• The tax office may not see this as an arm’s length transaction if you stay there yourself and may not allow claims for that period

• Paying the rent, or not receiving the rent if you stayed there free, is pretty similar and still represents a period of personal benefit

Scott I am unclear as to why you would be doing this anyway – paying rent to yourself, presumably via the manager who would be looking after it, means you only get the net rent after management costs.

As I said earlier, the problem is that few places we would like to holiday too are actually good places to invest and a holiday unit is often amongst the worst type of property too. Therefore, doing this could mean you would end up with a bad property, in the wrong area, just for the few weeks benefit, which is not a benefit since you are paying rent anyway!

Stick to buying great properties in strong areas which you legally rent to bona fide tenants – build up a solid portfolio and soon enough you’ll be choosing to holiday anywhere you want.

Margaret Lomas is a best-selling author and writes and hosts the popularProperty Success With Margaret Lomas and heads up the panel onYour Money, Your Call, both on Sky News. She is the founder of Destiny.

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