Husband/Wife - Reducing income tax due on rent

[metalfish]

I'm confused again now...

Maths, are you saying that the Declaration of Trust is a red-herring and rental income can only be apportioned in the same way as actual ownership specified in the Tenants in Common split?

This seems different to what others have been saying about setting up a Declaration of Trust, including Incredulum and Peter D, so again I feel as though there is conflicting advice here.

Is there any way to determine the definitive guide, (if indeed it is possible to do this)?

Thanks again.

[maths]

Maths, are you saying that the Declaration of Trust is a red-herring and rental income can only be apportioned in the same way as actual ownership specified in the Tenants in Common split?

Absolutely (where joint legal title) for married couples (non-marrieds subject to different rules).

This is quite clear from ITA 2007 s 837 and Form 17.

[section 44]

In this context, tenants in common and a declaration of trust are effectively the same thing.

Legally property can only be co-owned as joint tenants. That is, each legal owner owns the whole.

In equity property can be co-owned as joint tenants or tenants in common. The latter being that each person owns a proportion of the whole.

By holding property (in equity/beneficial ownership) as tenants in common then this means that the joint tenancy must have been severed. A declaration of trust would have the same effect or, where the joint tenancy has already been severed, could change each person's entitlement.

If the property is currently legally and beneficially owned as joint tenants then you could either:

1. sever the joint tenancy and own it as tenants in common beneficially 1:99;

2. declare a trust so that you both hold the property on trust for each of you beneficially 1:99; or

3. a two-step combination of the above,

the end result is the same.

[Incredulum]

Maths, are you saying that the Declaration of Trust is a red-herring and rental income can only be apportioned in the same way as actual ownership specified in the Tenants in Common split?

This seems different to what others have been saying about setting up a Declaration of Trust,

I don't think so. (It doesn't help that four people are telling you the same thing, differently.)

You started out with the position of a legal ownership split of owning the property 50:50 tenants in common and asking for a solution in order that W gets the lion's share of the income.

Is it possible for myself and my wife to be tenants in common owning 50% each of the property, but for any rental income to be split 99%:1% with the majority to going to my wife?

The solution to this question is a declaration of trust. There are plenty of other solutions to different questions which all give the same result.

[metalfish]

OK. I think I get it now.

Can anyone recommend a Solicitor with experience in this? Please PM me if you can.

Thanks again for you responses.

[bellrow]

Maths, are you saying that the Declaration of Trust is a red-herring and rental income can only be apportioned in the same way as actual ownership specified in the Tenants in Common split?

Absolutely (where joint legal title) for married couples (non-marrieds subject to different rules).

This is quite clear from ITA 2007 s 837 and Form 17.

Hi Maths

This is my first time so please be gentle! I have read your messages intently but like others am still utterly confused, I am in the same position regarding property however, myself and my partner are not married.

We own property as joint tenants(50/50) and want to split the rental income 100/0 or 99/1 in my favour as the lower rate tax payer.

Do we draw up a declaration of trust - if so do you know any good free templates? What wording needs to be included?

Do we fill in form 17 to HMRC?