Do you know the difference between tax evasion and tax avoidance? One is the legitimate dodging of tax through accounting techniques; the other is the illegal dodging of tax by hiding taxable income from HM Revenue and Customers (HMRC).

The subtle difference between the two is about to be put to the test in coming months if you own a holiday home in the UK or overseas. Because HMRC has set up a 200-strong task force to catch holiday home ‘tax cheats’ who rent out their properties but fail to declare the income in full – or at all – on their annual tax return.

A Grade II listed cottage in Devon typical of the kind rented out as holiday homes.

The important bit is that David Gauke, the austere looking Exchequer Secretary to the Treasury and Conservative MP for South West Hertfordshire, says he is after both those who ‘avoid’ and ‘evade’ tax – remember that when the economy was booming HMRC turned a blind eye to ‘avoidance’ and a small industry sprung up to help wealthy clients achieve it.

To put the frighteners on HMRC now says it has an array of sophisticated techniques to track income down including ‘data mining’ and ‘risk assessment’ which it will use to work out who appears ‘not to be able to afford a property’ or who are ‘not declaring the correct income from it’.

And income there is aplenty particularly if you rent out your UK holiday home. The number of tourists visiting our shores has risen year on year from 7.4 to 7.9 million a year and while they are spending less on each visit, many are switching from hotel to private holiday home renting which is often a third cheaper on average, according to research by website wheretosleep.co.uk.

The average UK holiday room rent is now £55 a night compared to a hotel room, which averages £83 a night, inspectors at the HMRC are no doubt quietly noting down.

Owning a French holiday home but only using it occasionally will get more expensive next year after France’s government pushed the first stages of a new property tax regime through the National Assembly.

The tax, which could force many holiday home owners to pay between £500 and £3,000 a year extra in tax – depending where they own – will be levied on the 350,000 foreign-owned second homes in France, of which 200,000 are owned by Brits.

Still friends: Will Cameron still be shaking Sarkozy's hand when the French president's new tax on British homeowners comes in next January?

France’s embattled French president is proposing to raise £176 million with a third property tax specifically on holiday home ownership but, although he has said it is not about taxing foreigners, the new duty will not apply to people who have been tax resident in France for three of the past ten years which means that, apart from French people who live outside France, it won’t apply to – for example – Parisians with rural or coastal holiday homes.

Property owners in France already pay two taxes on their property. The first is the Taxe d’Habitation, which is variable, paid by the person living in the property (owner or tenant). The second,the Taxe Fonciere is also variable but always paid by the property’s owner regardless of how much they use it.
Part of the Taxe Fonciere documentation includes a ‘valeur locative cadastrale’ which is the average potential rental value of a property and the new tax will be 20% of this.

Pretty taxing: holiday homes in places like the Tarne et Garonne will soon face a third property tax on top of the two existing ones.

So let’s say you own a holiday home in Nice, use it from time to time but its ‘assessed’ rental value is €5,000 a year, then you’ll pay €1,000 or 20% of £5,000.

There are three groups of people who will be exempt from the tax, which is due to be introduced in January 2012. These are anyone who has signed up to a ‘leaseback’ arrangement with a company such as Pierres et Vacances; non-French who live in France permanently; and anyone who puts their property on the books of a local letting agent and therefore – in theory – makes it ‘available’ for rent year round.

This last exemption is in effect a loophole that would be impossible to police and may render is impossible to levy. But as an obstacle to the tax’s success it is nothing compared to the European Court.

Several legal groups have said they will challenge the new tax on the basis that, although not stated openly, in practice it will be a tax almost exclusively on foreigners and therefore illegal under European law.

This Friday the Channel 4 TV show A Place in the Sun begins its three day tenancy at Earls Court in London and Primelocation International will be there, along with 160 companies offering overseas properties for sale and homebuying services.

Headlining the event will the show’s three most famous presenters – Amanda Lamb (who presents the show’s video, below), Jonnie Irwin and Jasmine Harman – who will be appearing on stage to give advice about buying foreign property and answer questions about their work as TV presenters and signing copies of A Place in the Sun magazine. But they will also be joined by other experts including LBC radio presenter, property investment guru and Apprentice TV show contestant James Maxx.

VIDEO: Watch Amanda Lamb introduce this year’s A Place in Sun Live show

Primelocation International’s property analyst Nigel Lewis will also speaking every day at the show on the main stage, revealing ‘ten things you didn’t know about overseas property’ including which country has the easiest buying/conveyancing process; which town the Spanish holiday home revolution started in, which country offers the best quality of life and which day was the best financially to buy a property in Europe over the past year. Catch him during the show at 11.45am on Friday, 12.30pm on Saturday and 2pm on Sunday.

And if you want a free ticket to attend the show – follow this link to claim yours.

Few of the adverts for overseas investment properties that lure you in with glossy pictures of slim models wallowing in pools next to whitewashed villas mention the less glamorous side of owning a buy-to-let property overseas.

There’s the local utility companies to deal with, the challenges of finding a reliable cleaner and gardener, footing unexpected repair bills and the often complicated local taxation regimes.

But one challenge that no one could predict is the mountain of weird or surprising items that holiday makers leave behind in rental properties overseas for landlords to clear up .

According to Owners Direct, one of the leading private holiday home rental websites, the items most often left behind are the ones you’d think holiday makers need to get home – money, passports, false teeth, vital medicines, travel documents and car and house keys.

But although leaving behind these essentials can have serious and  expensive consequences, other belongings left behind by holiday makers are obviously too embarrassing to take home or worth retrieving.

Items found by Owners Direct landlords in properties include a pair of Father Xmas trousers, a fake beard, a false leg, a bongo drum and a full sized rubber mask of George Bush.

And being a holiday home owner might appeal to those with a thirst for free alcohol – holiday makers regularly leave behind titanic caches of unconsumed booze rather than lug it all the way back home.

But perhaps the most surprising items left behind were the most generous. One owner said a customer of theirs replaced all the light bulbs in their property with low energy ones for free.

It’s 20 years since the infamous Berlin wall came down, reuniting east and west and transforming life in the city of Berlin, Germany.

A recent episode of Channel 4’s Location, Location, Location, saw Phil Spencer and Kirstie Allsopp helping a couple look for a home in the UK and an investment property in Berlin. In typical Location, Location, Location fashion, despite looking at some great properties in Berlin, the couple eventually decided that perhaps they wouldn’t buy in Berlin just yet after all. But if it’s piqued your interest and got you wondering about the benefits of Berlin, then here’s a brief rundown.

• Germany as a whole has a strong culture of renting property, rather than buying. Berlin is no different and there’s a low percentage of property ownership – over 80% of Berliners are tenants, rather than property owners. This offers good possibilities for buy-to-let investors, who want to purchase Berlin property for rental purposes.
• The rental culture means that many people rent on a long-term basis, rather than short-term, so you may be able to get a tenant who stays put for a while, reducing the hassle of regularly having to find new tenants.
• There are also opportunities for short term corporate rentals too. Many large companies are based in Berlin and, where they used to house employees in hotels for a short-term basis, the increase in tourism has boosted hotel prices. So, small furnished apartments on short leases are proving a good alternative for business use.
• Some of the prime areas to buy include the up-and-coming central eastern districts, as explored by Location, Location, Location, such as Prenzlauer Berg, Friedrichshain and Kreuzberg.
• Other more established and affluent areas of Berlin, with more expensive properties, are the central western parts, such as Charlottenberg, Wilmersdorf, Mitte and Schoneberg.
• In the central parts of Berlin, there are mostly flats and apartments available – in old historic buildings, as well as some new builds. If you’re interested in houses, you may need to look towards the leafy suburbs, on the outskirts of the city.

See something you like? Take a look at properties for sale in Berlin.

As well as all the essentials you’ll need to include when equipping your holiday property, it’s always good to include a few added extras, home-to-home comforts or special touches that will make their holiday memorable. For example:

• Tourist brochures and leaflets of things to do are great, but if you’re really keen you could produce your own guide to what to see and do in the area. A personal touch like this makes a good impression.
• Suggestions for restaurants, cafes, where to eat the best ice cream, taxi firm numbers, public transport information and directions to shops for provisions.
• If the property is likely to attract families with children, then a few toys or DVDs for them to watch go down well.
• Candles and matches may be useful in case there’s a power cut.
• Bottled water is good for foreign climes, where they may be unsure if it’s okay to drink the water. You don’t have to supply their whole stay, just something to get them started with.
• A few snacks left in the fridge, some teabags, milk and a loaf of bread are good starters and appreciated after a long journey. Or you could include some local delicacies for them to sample.
• If you have equipment that may be tricky to use or windows where you need a certain knack to open them, then include operating instructions.
• If your property is in a hot country, then perhaps include a fan in case the temperature soars. If it’s a ski property or in a cold country, then maybe some extra blankets would be good.
• Wifi, so checking email is made easy.
• Emergency numbers, for example for hospitals or doctors, or even for the property management agency, should a problem occur.

Once your property is fully equipped, it’s a good idea to ‘test’ it out for a few days to see if you’ve got it right. If you feel too familiar, then find some friends who’ll try it out for you and be prepared to give a critical review. They may be able to highlight what works and what doesn’t (e.g. there would be more preparation space if the kettle moved to another work surface, you could do with putting the saucepans nearer the oven or another hook in the bathroom would be handy) and any extras that the property could benefit from.

So you’ve invested in a foreign property and are intending on letting it out for short holiday rentals. Now comes the important task of equipping it with all the essentials that holidaymakers will need – and a few added extras that they’ll appreciate.

It sounds easy, doesn’t it? But it’s not always a doddle. When you’re trying to kit out and provide the perfect accommodation, there’s an awful lot to think about and do and it’s remarkably easy to miss out on the essentials (for example, I’ve stayed in a holiday property that had been kitted out with the best technology and music on demand in every room – but they’d forgotten the basics in the kitchen, like a tin opener and cooking equipment. It was the basics we needed much more than the music).

It helps to write a list of everything you can think of that people would need when staying in your holiday property. Try doing it room by room, to break it into chunks and think about all eventualities. Consider whether you need things like:

• Bedside lamps
• A hook on the back of the bathroom door
• Bath mats
• A bedside table
• A coffee table or smaller tables in the living area
• Somewhere to hang washing or dry off beach towels
• Somewhere to leave ski equipment after a day on the slopes
• A ledge in the shower to put your soap or shower gel
• Extra clothes hangers
• Electrical equipment – a TV, DVD player, CD player etc

Getting it right in the kitchen is important, as it’s frustrating to find yourself without essentials like a tin opener, especially if you’re in a foreign country and aren’t up to scratch on the lingo. Although people will be on holiday and may well eat out some of the time, part of the reason why self-catering is chosen is so they can cook for themselves and eat at the property, so a full range of cooking equipment is required.

There are likely to be the occasional breakages too, so when you’re choosing crockery or glasses for the property, then it’s best to opt for something that can be easily replaced and matched. It’s even helpful to have some extra supplies ready in case breakages do occur – they can be kept in storage in the property and, if you’re using a letting agent or management company, they’ll hopefully be able to add the replacements so future guests are not suddenly short of plates or glasses.

If you own a holiday home and let it out, then what are your reasons for doing so? There may be a number of reasons involved in your decision to put your holiday home on the lettings market, not least the desire for an extra income. According to a recent survey of over 3,000 holiday home owners, many people now let their holiday homes out of necessity.

The survey results show that 43% of people said they’d entered the lettings market out of necessity to cover essential costs, such as their mortgage, taxes and maintenance. A similar survey conducted by the same company in December 2007 found that only 30% of people let their property because they had to. This increase in the need to rent out a property is possibly reflected in the change of economic situation and the fact that more people have taken the chance to buy properties abroad.

Another top reason for letting a holiday home, cited by 41% of respondents, was being because they realised the added value of their second property as a means to generate income.

As far as the initial financing of their property goes, one third of the survey respondents said they had a mortgage loan to value (LTV) of 75% or more – and nearly 10% of people had a 90% LTV or more – and 27% had a local currency mortgage (Euro). Thirty-five per cent of people paid for their property purchase from cash or savings, 17% through remortgaging and 4% through inheritance.

The good news was that many people did say they were having success with letting out their properties. Over a third of people said they managed to fill their property for more than 25 weeks of the year with paying guests, whilst 50% said they achieved 18 weeks per year of lettings.

If you’re interested in letting out a property as a holiday home, take a look at our guide to letting a property abroad.

Do you already own an international property that you’re letting out? What are your reasons for doing so? What kind of success are you having?

Many people buy homes abroad for investment purposes and, rather than having them left empty, want to let them out. But it’s not always easy when you’re located hundreds of miles from the property. Here are some tips on making the most of the letting potential of your property.

1. First check that you can let your property. In some areas, there are restrictions in place.

2. Find a reputable management company located near your property, to handle the letting for you. Depending on where you’ve bought your property, and if it’s in an established holiday village, there may have been letting or management options included in the blurb when you purchased the property.

3. Make sure you know exactly what the management or letting company will and won’t cover. Do they include cleaners, for example?

4. Weigh up the potentials of both short and long-term lets. Depending on the location, there may be a demand for long-term lets from locals. Although rent may be cheaper than peak holiday lets, having tenants in place on a long-term basis may work out better in the long run.

5. Ensure your property is fully furnished and has all the necessary equipment included, especially if you’re going to offer short-term holiday lets.

6. If you’re going for a holiday let, decide who your property will be aimed at – young families, couples, older couples or high-end luxury holidaymakers.

7. Consider how your property will be advertised. A management company should do plenty of their own advertising, but you could boost it by setting up a website to promote your property too, or place ads in local publications if you’re trying to attract the holiday rental crowd.

8. Ensure you’ve sorted out any relevant insurance. You can find advice on insuring your investment property on Primelocation.com

9. Put together a pack of tourist information for your holiday home, so renters will know where the local restaurants are, where they can catch buses or trains, where the nearest shops are and any attractions worth visiting in the area.

10. Set aside a budget for dealing with wear and tear. This is inevitable with renting a property and there will be things that need updating, replacing or decorating.