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Rental income - reporting issues

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Joined: Wed Aug 06, 2008 1:53 pm

Rental income - reporting issues

Postby ChristopherL » Thu Jan 14, 2010 3:52 pm

I have a couple of examples that i am trying to find out the answers to:

1) Mrs X owns a house in her own name and rents it out. But the mortgage is in Mrs & Mr’s name.
Am i correct in that the rental income only gets reported on Mrs X?
Or can they elect to have it treated as joint income based on the fact they are either a) married or b) have a joint mortgage?

2) Mrs X and Mr X own a house together and rent it out.
Can they elect to have the income treated on just one of them rather than both if they wanted to?
Does it make any different if the mortgage is in joint or sole names or does this not effect the tax treatment?

I have seem something about a 'Form 17' although i am not sure if or when this is used.

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Joined: Fri Nov 06, 2009 9:26 am

Re: Rental income - reporting issues

Postby mullet » Thu Jan 14, 2010 4:28 pm

Extract from Property Income Manual PIM1030

Husbands and wives or civil partners living together should generally be treated as entitled in equal shares to income from jointly held property.

See ICTA88/S282A for years up to 2006-07, and ITA07/S836 for 2007-08 onwards.

However, this rule will not apply in any of the following instances:

>> the income is earned income (or, like furnished holiday lettings, treated as earned income) - ICTA88/S282A (4)(a), ITA07/S836 Exception D,
>> there is actually a partnership - ICTA88/S282A (4)(b), ITA07/S836 Exception C,
in this case the income is divided according to the terms of the partnership agreement,
>> both husband and wife, or both civil partners, have signed a declaration under ICTA88/S282B or ITA07/S837 stating their beneficial interests in both the property and the income arising from it,
but a declaration is only valid if their interests in the income and in the property itself correspond.

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