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Landlord's Energy Saving Allowance By Simon Thompson |
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The Landlord Energy Saving Scheme (LESA) can save up to £1,500 in income tax on every buy to let property in an investor’s portfolio simply by buying in to energy efficiency products for the home.
HM Revenue and Customs is running the scheme until April 5, 2015 – and LESA runs alongside the Green Deal for Landlords.
How does LESA work?
A landlord invests in buying and installing energy efficiency products for the buy to let and then reclaims up to £1,500 per property per year through the property pages on the self-assessment tax return.
What are the energy efficiency products that qualify?
A number of home improvements come under LESA -
• Insulation for lofts and walls
• Draught-proofing
• Insulating the hot water system by lagging pipes and water tanks
• Underfloor insulation
Does LESA apply to overseas letting properties?
Yes, providing the landlord pays tax in the UK on any rental profits
What if I own more than a single buy to let?
LESA applies to buy to let homes and houses in multiple occupation (HMOs), and the landlord can claim up to a maximum of £1,500 per property in a tax year. If the property comprises six flats, the landlord can claim up to £1,500 for each flat.
What if the property is jointly owned?
If you jointly own property, you can either claim LESA according to your cash input in to the improvement or by your percentage ownership of the property.
So, if you paid out £500 towards the improvements costing £1,500, you can claim £500 as your share of the LESA relief or £750 if you are a 50:50 joint owner.
I installed the improvements; can I still charge my time?
No. You can reclaim the cost of the materials but not your time.
Are there any exceptions to claiming LESA?
Yes. Landlords cannot claim if they are also claiming under the Rent A Room scheme or if the property is let as holiday accommodation.
Importantly, LESA cannot be claimed as a pre-letting expense unless the transaction took place less than six months before the date of first letting the property – which is the date the first tenancy agreement starts.
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New Section 21 rules cause landlord confusion |
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New Section 21 rules cause landlord confusion
New Section 21 rules are causing confusion among letting agents and landlords, says one law expert.
The new rules come into effect from October for tenancies created before October 2015.
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