Solar panel tax loophole is a bright idea for landlords

Solar panel tax loophole is a bright idea for landlords

17:10 PM, 1st February 2011, About 13 years ago 6

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Some landlords have had the bright idea of making money from their tenants by renting their roofs  to solar energy firms that generate power they can sell.

It may seem barmy, but a new law passed last year let’s home owners power their homes for free and sell any excess electricity to the National Grid.

The problem is, the home has to have the ‘right ‘ roof to take advantage of the deal.

To qualify, your house must:

  • Face south
  • Stand out of any shade
  • Have a pitch of 30 degrees or less
  • Have an area large enough to take 14-18 solar panels measuring about 60 inches tall and 30 inches wide each.

Roofs ticking these boxes will generate about 2,800 kilowatt hours of electricity a year, rain or shine.  The further south your buy to let, the more KwH are likely to be generated as homes on the Isle of Wight and in Cornwall should expect more hours of sunshine than those in the north of Scotland.

Generate income from selling electricity

The government-backed feed-in-tariff would pay 41.3p for each kwH – adding up to £1,156 a year.

The drawback is the cost of installation – at an average of £14,000 per home.

The options are buying and fitting your own system and selling your excess power to the grid or picking up free electricity for life and letting a firm cover the cost of installing the panels and the cash from any excess supply generated.

Property investors running furnished holiday lets might also qualify for an extra tax break – if the government lets them keep lucrative capital allowances after April.

Furnished holiday let tax laws are awaiting finalisation in the Finance Act, which comes in to force on April 6.

Solar panels could fit the definition of plant and machinery that attract a 100% tax write-off as an Annual Investment Allowance (AIA) in the year they are purchased – meaning the cost of installation is balanced off against income tax.

For many holiday lets, writing off £14,000 would wipe out taxable profits for several years – and meanwhile the solar panels would generate free electricity and an income in the meantime.

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10:07 AM, 3rd February 2011, About 13 years ago

Whilst I realise that this article is mainly about allowing a commercial company to put their own equipment on the landlord's rented-out roof space, that is not for everyone.
Are we certain that Annual Investment Allowance (AIA) is available for personal owners who do not own their houses through Limited Companies?
From may own investigations, private landlords seem rather caught out by tax rules: FIT is normally talked off as being tax-free BUT you have to LIVE at-or-near the roof in question to qualify and many landlords do not - making FIT not tax-free. Also as non limited company owners, landlords could not gain tax allowance for making the initial solar panel investment under iincome-from-UK-property rules. I was eventually professionally advised to set up a separate company to generate power from our own roofs! A tortuous prospect!

Mark Alexander - Founder of Property118

10:23 AM, 3rd February 2011, About 13 years ago

Thank you for registering an commenting. A real name that we can associate with would be very much appreciated. Is that your real picture?

12:27 PM, 4th February 2011, About 13 years ago

I've been thinking of doing this at some of my properties for a while. I also want to see if it will tie in with the Governments "Green Deal" scheme. I see it as being a potential win/win situation for landlords and tenants but at present the water seems a little murky regarding offsetting the capital costs (I dont have holiday lets) and I'm waiting for it to clear. (Or to find a trustworthy consultant to advise me)

Mark Alexander - Founder of Property118

13:17 PM, 4th February 2011, About 13 years ago

19:36 PM, 9th May 2011, About 13 years ago

The link to Steve's guide is not working. Would you kindly forward the guide to me? many thanks..

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