Transferring rental income to spouse although not legal owner of the property.

[bellmt1]

I am a 40% taxpayer and am the sole owner of 2 buy to let properties. My husband is retired and not a higher rate tax payer. Can I transfer rental income to him, even though he has never been an owner of either of the properties.

[maths]

You will need to transfer a beneficial interest to him in respect of which he will then be entitled to the rental income attributable to such an interest.

In essence you simply need to execute a declaration of trust as to say 100% husband and 0% you (or whatever other %s you choose).

Husband does not need to become part of the legal title.

Care is needed if the properties are mortgaged.

[bellmt1]

Hi thanks for the reply that helps a lot. Both properties are mortgaged - what do I need to watch out for?

[maths]

An SDLT charge may arise where the beneficial interest you transfer to your wife is subject to mortgage (which it is) unless it is made clear that wife is not assuming any such liability.

She is unlikely to get an interest deduction for tax purposes against the rental income.