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Where Taxpayers and Advisers Meet

Tax on Income from Rent

sr2mace
Posts:1
Joined:Mon Aug 07, 2017 8:42 pm
Tax on Income from Rent

Postby sr2mace » Wed Aug 16, 2017 1:48 pm

I am looking for some advice on the best option in relation to tax on a second property I own jointly (50/50) with my wife.

I am in the higher tax bracket, but my wife isn't...even if we take into the account the income from rental. So should I transfer the deeds into her name and she owns the property 100% and declares the income, would I be right in thinking that I wouldn't be liable to pay any tax? I ask as this was my thinking, however, someone mentioned I should check as we are married.

Also, if I was to transfer the property back into our joint names nearer to the time of selling, to avoid my wife being left with the Capital Gains Tax bill, does HMRC take into account that the property was solely owned at one time at point of sale?

Thanks for your help.

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

Re: Tax on Income from Rent

Postby maths » Thu Aug 17, 2017 9:37 pm

There is no need to transfer the legal title into wife's name. If there is a joint mortgage, this wouldn't be possible anyway.

All that is necessary is that you both, as legal owners, execute a declaration of trust (DoT) with the beneficial interest in the property split, say, 100%/0%; 99/1% etc.
Form 17 would need to be completed and lodged with HMRC.

At anytime in the future a superceding DoT could be executed to mitigate and CGT charges on a sale.


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