This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

joint tenancy possible with form 17 ? advice request please

isidore91
Posts: 3
Joined: Sun Jan 06, 2019 10:15 pm

joint tenancy possible with form 17 ? advice request please

Postby isidore91 » Sun Jan 06, 2019 11:05 pm

hi

i'm new on the forum and started doing some research recently. I would need your advices please.
I'm married and looking to buy my 1st buy to let property and I'm paying for the whole property.
I'm a high tax payer and when i die, i would like it to go to my wife.
I would like to reduce the tax on the rent (it's my 1st investment and giving nearly a half on something "risky" and new make me feel bad :? )

when i die, i would like it to go to my wife.
=> for no hassle (stamp duty or other), i am thinking about joint tenancy

I'm a high tax payer
=> i'm thinking about unequal beneficial interest (1%/99%).
DO i need a declaration of trust for that ?
Can i do a form 17 for that ?

i'm a bit reluctant about tenancy in common when i pay for the whole property...and finally only own 1%... when in joint tenancy at least i have legally the half.

MY concern : https://www.taxinsider.co.uk/1620-Joint_Property_And_Form_17_Practical_Points.html seems to say you can't do form 17 in joint tenancy !
is that correct ?

What would be your advice or recommendation in this situation please??

a tenancy in common, if wife dies, will i have to pay stamp duty on the 99% share or something like that ?

AGoodman
Posts: 768
Joined: Fri May 16, 2014 3:47 pm

Re: joint tenancy possible with form 17 ? advice request please

Postby AGoodman » Mon Jan 07, 2019 11:30 am

On succession, you cannot have it both ways - any split in ownership 1/99 or even 50/50 is a tenancy in common and not a joint tenancy.

In a joint tenancy, you both own the whole (so it automatically passes to the survivor on death) and are taxed as 50% owners.

If you want a 99/1 split then it will be a tenancy in common. You need a simple trust deed setting out the split (or can potentially do it in the transfer deed when you buy) and have to file form 17, otherwise the income will be taxed 50/50 regardless. You may also want to make a will to ensure that your share passes to your wife (if you have children and a substantial estate, this may not be the case).

isidore91
Posts: 3
Joined: Sun Jan 06, 2019 10:15 pm

Re: joint tenancy possible with form 17 ? advice request please

Postby isidore91 » Mon Jan 07, 2019 1:19 pm

hi

-can you decide to have tenant in commun with 90/10 share or 50/50 share
AND choose the beneficial interest to be 10/90 ?
In a joint tenancy, you both own the whole (so it automatically passes to the survivor on death) and are taxed as 50% owners.
Are you telling me that even if me and wife both own 100%, when one die, then half is taxed as part of the inheritence rule ?
if that's really true then there's not that much difference with a tenant in commun 50/50 who would also be taxed at 50%.

thanks for the clarification please.

AGoodman
Posts: 768
Joined: Fri May 16, 2014 3:47 pm

Re: joint tenancy possible with form 17 ? advice request please

Postby AGoodman » Mon Jan 07, 2019 2:41 pm

I wasn't talking about IHT here. I meant that under a joint tenancy, income and gains are allocated equally between the joint tenants.

The difference is one of succession. A joint tenancy automatically passes to the survivor. The deceased's share under a tenancy in common passes under their estate. This may well result in it passing to a spouse - but if there is no will it depends on a number of other factors because part of the estate may pass to children.

IHT is entirely separate. If assets pass to a spouse (whether automatically or via the estate) they are exempt from IHT.

isidore91
Posts: 3
Joined: Sun Jan 06, 2019 10:15 pm

Re: joint tenancy possible with form 17 ? advice request please

Postby isidore91 » Mon Jan 07, 2019 3:24 pm

hi

I understand. Coming back to tenant in commun, can you decide to have tenant in commun with 90/10 share or 50/50 share
AND choose the beneficial interest to be 10/90 via form 17 ?

i read on the web "A declaration is only valid if their interests in the income and in the property itself correspond. " which looks like to say the answer is no to the above. (so it's either 50/50 or it need to match your share)

thanks

AGoodman
Posts: 768
Joined: Fri May 16, 2014 3:47 pm

Re: joint tenancy possible with form 17 ? advice request please

Postby AGoodman » Mon Jan 07, 2019 5:22 pm

No, as you say, it's either 50/50 or it needs to match your share


Return to “Property Taxation”