Shared Property - tax transfer

[Jaspal10]

HI

I own 50% of a property (inherited from Grandparents)

The property is Mortgaged in two names and the rent is paid into a joint account.

Whilst the property is 50 % in my name, my share is split between myself and my sister (this an agreement between ourselves)

My question is can i formalise this agreement (without adding her to the deeds) so that the rent (& subsequently tax) is split between us.

And in addition can i split the my tax burden between myself and my wife.

Thanks

[AGoodman]

Yes, you can make a declaration of trust that you hold your 50% as to 25% for your sister, 12.5% for you and 12.5% for your wife. Ideally, but not necessarily, this deed would be made by both the joint owners and cover the full 100%.

What is the current position? If your sister already in fact owns 25%, she may already be liable for income tax on her share of the rent.
This is also very important for CGT. If she does not own 25% now, and you are giving/selling it to her, you will be making a CGT disposal of the 25% at deemed market value and any gain vs the probate value will be subject to CGT.

[Jaspal10]

HI AGoodman

The current situation is that my sister owns 25% (though we have never formalised this agreement)

As of the 2017/2018 tax year she has been receiving her 25% share of the rent.

For the two years prior I was receiving 50% of the rent (I have paid the income tax on this).

Given that I now only receive 25% i want to make sure that I only pay income tax on my share.

Who would be the best person to go to in order to draw this trust up?

Thank you in advance

[Jaspal10]

In addition Myself and my uncle currently own the property as tenants in common (50:50)

[AGoodman]

It's a simple declaration of trust, any solicitor could draw it up.

You need to be clear about how your sister came to own 25%. If you gave or sold it to her at some stage then it would have been a CGT disposal.

[Jaspal10]

Thank you AGoodman

The property was inherited but was only transferred to me - From that point onwards my intention was to always split it with my sister so when it is eventually sold proceeds will be split accordingly