Interspousal Transfer

[ravenswood]

In 1991 when my father died my mother's solicitor set up a deed of variation which had to be completed within 2 years of my father's death to show me on the title deeds as tenants in common with my mother. My mother passed away 5 years ago and her name was removed from the title deeds with my name remaining and of course the restriction is still in place.
I rent out my mother's property which I have done since she passed away. I would like to know what to do for the best. Should I apply for an interspousal transfer and have my husband added to the title deeds and if so, would he be liable for tax on 50% of the rent etc, or can he be added and not claim any of the rent thereby not having to declare this on any tax return? I am a 20% rate tax payer and complete a tax return each year declaring the rental of the property. My husband is also a 20% rate tax payer.
Alternatively, should I wait until I am ready to sell the property and then do an interspousal transfer in order to have two lots of CGT relief?

If an interspousal transfer is done....would it be as joint tenants or tenants in common?

I'm sorry so many questions to answer!

At present the property my husband and I own are as tenants in common and we are now thinking of changing this to joint tenants as IHT rules have changed since we bought our present property. Is this easy to do, and can we do it ourselves by completing and RX3 Form plus individual ID1 Forms. What other supporting documents are required as supporting evidence to confirm we own all shares in our property without a mortgage or having a creditor with a charging order against any share. Can we write a letter to that effect to give to Land Registry?
We want to make things simple when one of us dies. We are both retired and have two children with grandchildren.

I would appreciate any help anyone can give as it is a minefield out there!

Many thanks

[LozaACCS]

In 1991 you owned 50% of the property as a TIC
I assume on your mothers death her 50% was left to you so you are now the sole owner.
I think in this case, for tax purposes the only benefit achieved by transferring a beneficial ownership to your husband would be a potential reduction in CGT on a future sale, the beneficial interest could be in either the capital or income or both.
From a legal perspective a transfer into joint names (as TIC) may offer some protection against possible care home fees in the future, the transfer would be exempt for CGT purposes.
None of this meets your goal of keeping things as simple as possible, perhaps you should discuss the matter with a local solicitor.

[ravenswood]

Thank you Loza for your helpful information.
With regard to our present property, would it make matters more simple to change form TIC to beneficial joint tenants? If we keep things as they are, when one of us dies, would it mean probate would have to take place on the first person's death whereas with joint tenants that would not be the case?

[ravenswood]

Hello Loza, many thanks for your help. One last question regarding the interspousal transfer. I understand this can be done by completing an AP1, TR1 and ID1 x 2 forms. What is are disclosable overriding interests? Does it relate to a restriction like tenants in common? Also, as I inherited 50% of my mother's share in the property as we held it as tenants in common, should I add my husband as a tenant in common or as joint tenants? If held as joint tenants, do we still qualify for a potential reduction in CGT on a future sale or does that have to be set up as tenants in common in order to qualify for CGT tax relief?
I notice on the TR1 form panel 10, there is an option for holding the property as either joint tenants or tenants in common in equal shares. However, as my name is on the title with the restriction (tenants in common), would i have to complete other forms to remove the restriction or would that automatically be removed if I decided on ticking the option as joint tenants?

A bit of a muddle with questions.

[GlobalTaxAdviser]

Like Loza mentions this really is more of a legal than a tax matter. You should consult your solicitor to get the right advice