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Where Taxpayers and Advisers Meet

Rental Income Taxation

Jaeger
Posts:1
Joined:Mon Oct 10, 2016 1:19 pm
Rental Income Taxation

Postby Jaeger » Mon Oct 10, 2016 1:29 pm

Hi all,

I currently own a BTL flat. The income combined from this BTL and my salary are just about pushing me into the 40% tax bracket, and when the new tax rules come in soon for landlords I'll be well down on the small income I currently get. The flat is in my name only.

My wife is currently on maternity leave and has no income.

What do I need to do to transfer the income to her for her to declare? Do I need to transfer the property in to her name? The BTL mortgage into her name? Or can some form of Declaration of Trust keep HMRC happy as to any income being hers?

Advice very mush appreciated.

Thanks

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Rental Income Taxation

Postby maths » Mon Oct 10, 2016 8:02 pm

A simple declaration of trust under which a transfer of beneficial interest to spouse occurs is sufficient.

To avoid SDLT charge spouse should not assume responsibility for the mortgage that remains with you.

Mpat
Posts:1
Joined:Tue Nov 01, 2016 2:24 pm

Re: Rental Income Taxation

Postby Mpat » Tue Nov 01, 2016 2:44 pm

Maths,
I have a similiar challenge whereby I will be making loss on the property-rental-income, once the new HMRC rules come into full affect from 2020.
My situation is as follows (some only for info purposes, so that you have full clarity)

Timeline:
2004 - Property1 bought and mortgaged in joint names (with Wife1) and lived into as a Primary Residence
2012 - Following a divorce, Transfer of deeds performed following which the Property1+BTL mortgage has been held only in my sole name.
2013 - Moved out of Property1 and started Renting it out. Self-assessment starts with HMRC.
2014 - Bought a mortgaged Property2, as main residence, jointly with Wife2.

Tax status : Wife2 is standard rate tax payer (not higher rate). I am on higher 40% rate.

Conditions : For Property1 (rented out property) - I do not wish to transfer the title deeds + mortgage (both held in my name only).

Requirement : Is there any way, I could reduce the burden on tax on me by using Wife2's lower-tax bracket ??

Mpat

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Rental Income Taxation

Postby maths » Wed Nov 02, 2016 9:44 am

My response above simply also applies here.


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