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Where Taxpayers and Advisers Meet

Joint ownership but sole mortgage

Brightonian
Posts:137
Joined:Wed Aug 06, 2008 3:31 pm
Joint ownership but sole mortgage

Postby Brightonian » Wed Sep 25, 2013 4:55 pm

My clients are unmarried. One is an additional rate taxpayer, while the other is a non-taxpayer. They are planning to purchase a buy to let property jointly. They will agree that profits and losses should be split 99/1 in favour of the non-taxpayer. They will need a mortgage. Instead of taking a buy to let mortgage on the rental property, they plan to remortgage their home at a low rate in order to raise part of the capital needed to buy the rental property. However, the remortgage can only be done in the name of the additional rate taxpayer, as he is sole owner of their home.

My question is, will only the additional rate taxpayer be able to benefit from interest relief or will they both be able to do so? Generally, where I have joint owners, even where the ownership split is not 50/50, I draw up a set of accounts based on all income and expenses and then allocate the profit to each in the relevant proportions. But in those cases, the mortgage is joint also.

HMRC seems to suggest that this is possible, as they talk of the share of profit, rather than the share of rent.
I shall be grateful to hear forum members' thoughts ont he matter.

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

Re: Joint ownership but sole mortgage

Postby pawncob » Wed Sep 25, 2013 5:05 pm

What's the problem? He's providing all the finance so he's entitled to relief on the mortgage interest.

http://www.hmrc.gov.uk/manuals/pimmanual/PIM2105.htm
With a pinch of salt take what I say, but don't exceed your RDA

section 44
Posts:4467
Joined:Thu Oct 30, 2008 12:47 pm

Re: Joint ownership but sole mortgage

Postby section 44 » Thu Sep 26, 2013 9:30 am

Sharing profits/losses, as opposed to income/proceeds, sounds like a partnership rather than co-ownership ....


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