Rental property will now be joint with wife

[Lorrie]

Can anyone advise on this please?

Client (J) has had rented property for 2 years, joint mortgage with girlfriend (M). Rent income has previously been all allocated to client, who is responsible for collecting rent, organising repairs etc. Client is planning to marry girlfriend and therefore in future rental income will have to be split 50/50.

However, there is currently a loss brought forward. Client wants to know if,in the next tax returns when the income and any profit is split between the two, is the loss offset solely against A's share of the income or can it be split between A & M?

It is important as M's income is already near/at 40% tax. If a share of the loss can be offset against her share of income then the tax liability will not increase, at least for this year.

I'm not sure it can be done this way but would appreciate advice/opinions.

[maths]

Following marriage rental income does not have to be split 50/50 if an appropriate election is made for a different treatment.

You indicate that currently the property is jointly mortgaged. How is the beneficial interest split between the two and what is the agreement between the two as to the split of rental income and expenses?

If the agreement is such that you, for example, receive 100% of the rents and incur 100% of the expenses which produces a loss then this loss can only be used by you.

If, however, for example rents are split 60/40 and expenses are similarly split and each of you have a loss then you can only each use your own loss.