Income tax on joint rental property

by **janrats** on Fri Apr 24, 2009 7:02 pm

Me and my boyfriend bought a property last year, it was my mother who died and we had to pay my brother and sister out, and my brother now rents it out for £70 We didnt pay them in equal amounts and it was agreed that I would have all the income as i only work part time.

I phoned the tax office up as I will be made redundant in a few weeks time and asked them what the situation is with the tax as I will not be paying tax in the future and that £70 will be my only income as I cannot claim job seekers as I live with my partner. The tax office insisted they will tax my boyfriend 50% of f his share of the £70 as the property is in joint names. I explained that this wasnt fair as we had made an agreement for me to have this income and why should he be taxed on something he is not getting, but they still insist this is correct. I I paid the most money for the property as my brother didnt want to sell and wanted to continue to live there. My boyfriend only gave me some money to help my buy the property but we put the property in Joint tenanats because I wanted him to have the property if anything happened to me. there anything i can do about this? because obviously he doesnt think its fair to be paying income tax on something he is not receiving. Thanks

by **Peter D** on Fri Apr 24, 2009 7:22 pm

Something is wrong here. Firstly un married partners owning a property can declare to HMRC how they want to apportion the rental income in a simple letter. You say you are receiving £70 rental income, what , a year, a month, a week. Living with someone does not exclude you from JSA, your rental income may effect it though. Regards Peter

by **janrats** on Fri Apr 24, 2009 7:47 pm

Hi the rental is £70 per week, but I can only claim job seekers allowance for 6 months but not the income based one because i have savings then because I am living with my partner I wont receive any because they say I have to live of his earnings and my savings. But the tax insist because he is joint owner they will still take his tax of the rental whether he receives it or not.

by **Peter D** on Sat Apr 25, 2009 8:35 am

You say "and my brother now rents it out for £70" Do you mean that my brother[b][/b] even more consuing. Ringing up a HMRC call centre is not the way to resolve this you need a face to face meeting and have all the facts with you. Regards Peter

by **Peter D** on Sat Apr 25, 2009 8:36 am

Sorry confusing. Regards Peter

by **Waterangelica** on Mon May 11, 2009 6:06 pm

Am I right in thinking that the house was originally your late mother's and you and your boyfriend bought your brother and sisters interest in ("share of" ) the property and you now rent the house out to your brother for £70 pw..

I think HMRC are wrong in this case ( may be different if you were legally married) but you may just want to check whether you and your boyfriend own the house as joint tenants or tenants in common

Joint owners who are not a legally married couple may agree to share rental income in different proportions to their legal ownership of the property . The Income Tax treatment should follow the agreed profit sharing arrangements. It might be an idea to keep a note of your intended shares for future reference. Ask HMRC to send you a form17 or download one from HMRC's website

by **AvocadoK** on Mon May 11, 2009 6:47 pm

Waterangelica, Form 17 applies only to married couples/civil partners (but I agree that unmarried couples can share profits in whatever proportions they please),

by **maths** on Tue May 12, 2009 2:46 pm

Whilst speaking to HMRC is a perfectly reasonable thing to do sadly, these days, the phones are to a very great extent manned by individuals who really do not understand the tax legislation and as a consequence often proffer incorrect advice, however well meaning.

Assuming you and your boyfriend own the house as joint tenants (or tenants in common 50/50) prima facie you are each subject to income tax on the rental income 50/50.

However, you can agree a rental split different from the above 50/50.

Such an agreement should preferably be in writing duly dated etc.

There is no need to supply this agreement voluntarily to HMRC unless, following the lodgement of a Tax Return, they request sight of it.

Form 17 is inappropriate as it only applies to married couples as stated above by " AovacadoK".