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Where Taxpayers and Advisers Meet

Sharing tax bill in rental property

Mrshare
Posts:9
Joined:Mon Aug 13, 2018 7:19 pm
Sharing tax bill in rental property

Postby Mrshare » Mon Aug 13, 2018 7:44 pm

I have a 50% share in a property I rent out. I would have to pay higher rate of interest in the income. Should I transfer half of my share to wife who is a base rate tax payer.
Is there a down side to doing this. I inherited the property last year.

Mrshare
Posts:9
Joined:Mon Aug 13, 2018 7:19 pm

Re: Sharing tax bill in rental property

Postby Mrshare » Thu Aug 16, 2018 11:17 am

after reading many of the posts it is my understanding that I need to do a declaration of trust and complete form 17 for HMRC

not clear if I have to do anything with land registry.

What proportion of transfer do I need to make. I want my wife to get half of the interest earned on rental.

I am assuming that we would both qualify for the £1000 property allowance which could be deducted from the interest earned.

Note this is on a 50 % share of the property. The other half is owned by my sister

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Sharing tax bill in rental property

Postby SteLacca » Thu Aug 16, 2018 3:08 pm

Whether or not you should will be dependant on longer term plans. You also need to consider the CGT position if it is eventually sold, or the inheritance tax position if not, both of which could be adversely affected for a comparatively small shorter term gain.

Mrshare
Posts:9
Joined:Mon Aug 13, 2018 7:19 pm

Re: Sharing tax bill in rental property

Postby Mrshare » Fri Aug 17, 2018 9:34 am

thanks for this advise.

Property was valued at 170K when I inherited it with my sister( we each own 50%)

I am looking to save around £650 pa by transfering half of my 50% share to my wife



Reference future capital gains tax I will be splitting my half with my wife so reference future capital gains tax we would each have the allowance to offset any CGT

If the current allowance is £11700 the value of the house would have to increase by £46800
(4 x £11700) before we would have to pay CGT

Have I got this right.

If I stayed as I am I would have to pay CGT if value increase more than £23400( 2 x £11700)


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