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Where Taxpayers and Advisers Meet

Transferring share of property to my wife long after property has been bought

TomKLondon
Posts:10
Joined:Thu Jan 22, 2009 2:48 pm
Transferring share of property to my wife long after property has been bought

Postby TomKLondon » Mon Oct 15, 2018 7:24 pm

I am a higher rate tax payer by employment and a landlord of one property which I used to live in as my main residence when I bought it. My wife is a basic rate tax payer with about 20k spare before she hits the higher tax rate threshold. The property rent is 26K a year before any expenses are deducted and this has been paid into a rental income account in joint names for the last 6 or more years. The BTL mortgage is currently in just my name but it's time to remortgage. We are considering putting the BTL in joint names if it will allow half the income to be taxed as my wife's income at basic rate. We've been advised of the likely stamp duty cost and conveyancing costs and are ok with these.

What is not clear from my research and other forum entries is whether changing the mortgage and deeds to joint names will GUARANTEE that we qualify to be taxed as a 50:50 split. (we are not trying to gain an unequal split via form 17)

I don't want to create a later problem for my wife with capital gains tax so I'd appreciate advice on the impact of that. The value of the property is about 510k and the BTL mortgage is 301000.

I will get personal tax advice but I just want to know if its worth me incurring the cost of that advice before I go any further. Any specific advice based on the information I've given is most welcome.

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

Re: Transferring share of property to my wife long after property has been bought

Postby maths » Mon Oct 15, 2018 7:34 pm

Where property is held in joint names of both spouses then for income tax purposes any rent is automatically slit 50/50.

Thus, if you remortgage and put new mortgage into joint names and legal title in joint names the 50/50 split above applies.

It will also be necessary for a 50% beneficial interest to be transferred to wife i.e. you then own beneficially 50/50.

TomKLondon
Posts:10
Joined:Thu Jan 22, 2009 2:48 pm

Re: Transferring share of property to my wife long after property has been bought

Postby TomKLondon » Tue Oct 16, 2018 9:09 am

Thank you Maths. That is good to know. Could you or any other forum members provide any advice on the capital gains tax implications of the transfer to 50/50 ownership? I should have included that the original purchase price was 130K. To recap, the current mortgage is 301000 and the property value is about 510000.
Tom

pawncob
Posts:5090
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Transferring share of property to my wife long after property has been bought

Postby pawncob » Tue Oct 16, 2018 10:24 am

Gains arising from inter spouse transfers are exempt from CGT.
With a pinch of salt take what I say, but don't exceed your RDA

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: Transferring share of property to my wife long after property has been bought

Postby robbob » Tue Oct 16, 2018 11:19 am

There could be an issue with regard to capital gains tax when you come to sell the property due to this transfer , at present you have the exemption from your period of occupation as the owner and also lettings relief. Your spouse will have no such reliefs available (unless she moves back in as residence later) so that could be an issue when it comes to the eventual sale if the overall effect of losing the exemptions on half the sales price triggers more capital gains tax than is saved by her being a joint holder with annual exempt amount but no such discount on the amount charged to capital gains tax.


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