To utilise the tax savings is relatively straightforward. Both spouses execute a declaration under which they confirm that they hold the legal title jointly for the property and that one spouse holds that title on trust beneficially for the other as tenants in common. The actual proportion will be determined by both parties written agreement on the Trust Declaration eg. 90/10. However, the income will continue to be split 50/50 until HMRC are formally notified using their Form 17. This form allows the income to be split in line with the beneficial ownership eg 90/10. Providing the completed Form 17 and a copy of the Trust Declaration are received by HMRC within 60 days the income allocation comes into effect from the date of the declaration.
There are no Land Registry fees involved since there is no change to the actual legal title and no requirement to inform any Mortgage company .A separate Declaration of Trust is required for each property.
It is a misconception that aTrust Declaration changes the actual legal ownership. HMRC Form 17 permits income from property, whose legal title is held in joint names, to be split according to the beneficial interest as agreed in the declaration of trust.
There is no limit to the number of declarations a couple may make to HMRC and a new one can be agreed at any time. However, the declaration cannot be backdated to reduce any tax burden.
Landlords need to be aware that a Trust Declaration may affect any capital gains in the event of a property sale. To minimise capital gains tax a further declaration may be appropriate prior to the sale of the property but be aware that such a declaration will be invalid after the exchange of contracts. It is suggested that any new declaration is completed once a decision has been made to dispose of an asset and in any case at least 28 days prior to exchange of contracts.
Source:
http://www.taxlandlord.com/#/tax-saving ... 4566938308