Readers’ forum: Averaging election under ITTOIA 2005, s 326

My client Louis (L) and his brother Andrew (A) inherited a cottage from their parents years ago. The property is used as a holiday let and had for many years met the FHL conditions – being available for some 300 days/year and let for some 180 days on short lets. Profits are shared jointly between the siblings.

Last year Louis’s wife Lizzie (LZ) inherited a bungalow from her parents and the couple decided to register ownership jointly. The bungalow is also let on an FHL basis but was only let for 40 days in the first 12 months since it was first let on 6 April 2022 (‘qualifying period’ set out in ITTOIA 2005 s 324(2)).

L therefore has a 50% interest in the cottage – which qualifies as an FHL in 2022-23 – and a 50% interest in the bungalow – which on...