2nd property tax query

[Bluefish]

Hello,

My wife and I have a mortgage on a property we live in London. We recently bought another propoerty outside of London with a view to letting it out in the short-mid term and eventually selling it.

I am employed and on the higher tax rate. My wife is a newly qualified teacher on about £23K. The buy-to-let is on my name.

Should we change it over to her name and reduce the CGT that will be due?

[Nigel Lord]

Bluefish

There are two considerations - Income Tax and CGT.

In the short term it may be advisible to transfer the beneficial ownership of the whole property to your wife so all the net income is taxable on her (at basic rate). This may be done by a simple deed of gift supported by an appplication for exemption from Stamp Duty Land Tax.

N.B. beneficial ownership of capital and entitlement to income may not be separated in respect of married couples.

Prior to sale, it would be sensible to transfer a sufficient proportion of the ownership back to you to ensure that your annual exemption for CGT is utilised.

If you require assistance in effecting the deed of gift, please do not hesitate to contact me.

Nigel Lord
Lord Associates
Taxation & Business Consultants
Caxton House
Old Station Road
Loughton
Essex, IG10 4PE
020 8418 9101 & 07769 931852
mail@lordassociates.co.uk