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Where Taxpayers and Advisers Meet

Transfer of rental income to spoise

venture53
Posts: 13
Joined: Thu Jun 16, 2011 12:56 pm

Transfer of rental income to spoise

Postby venture53 » Tue Feb 13, 2018 11:48 pm

aviemore » Thu Feb 21, 2013 4:03 pm

I have a query re transfer of rental income to my wife as due to the change in tax relief on mortgage interest, my tax liability is going to go up significantly

1. I own few BTLs with my own name with btl mortgages on them.
2. My wife is a non tax payer
3. I would like to transfer some of the rental income to her
4. I cannot, at this time, transfer the mortgages into our joint names.

What is the best way of doing this without changing the ownership and without affecting the mortgages? What happens to the mortgage interest - if I retain ownership and transfer some of the rental income to her?

if the ownership has to be transferred to make it possible for her to receive the rental income then
is it possible to give her a minor share of the property ( say 20%, provided the mortgage provider agrees) but nominate her to receive a higher share of the rental income). If yes, how are the expenses on the property allocated - as per the ownership or as per the allocation of the rental income ?

Any advice would be highly appreciated.

bd6759
Posts: 2818
Joined: Sat Feb 01, 2014 3:26 pm

Re: Transfer of rental income to spoise

Postby bd6759 » Wed Feb 14, 2018 9:15 am

You cannot transfer income without also transferrig ownership of the underlying asset. The income proportion will follow the ownership proportion.

If your wife isn't party to the loan she cannot claim interest as an expense, and you will lose a proportion equal to the proportion of ownership that you give up.

someone
Posts: 317
Joined: Mon Feb 13, 2017 10:09 am

Re: Transfer of rental income to spoise

Postby someone » Wed Feb 14, 2018 9:32 am

You can only give a minor share but half of the income to your wife if you put the mortgage and property into joint names.

Then the income (and expenses) are shared 50/50 unless you elect for the treatment described above

You don't explain why you cannot put the mortgage into joint names but if it's due to SDLT then you could give your wife 1% - which will (probably!) be below the 125k threshold but she could get 50% of the income.

I'll be interested to know if the mortgage company agree to giving away a share of the beneficial interest without your wife being a party to the mortgage. I suspect people who do this don't ask. Whether that's legal I have no idea.

maths
Posts: 7343
Joined: Wed Aug 06, 2008 3:25 pm

Re: Transfer of rental income to spoise

Postby maths » Sat Feb 17, 2018 8:57 pm

It is possible to transfer/assign a proportion of the rental income you receive to your spouse.

However, this would constitute a settlement and 100% of the rents would still be subject to income tax on your part.

You would therefore need to transfer a % of the beneficial interest in the property. On doing so, this transfer would probably be better unencumbered ie wife not responsible for any part of the mortgage.


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