Rental Income

[Instinctive]

With tax enquiries, there are always pros and cons of responding in a certain manner.

It is clear that there are issues relating to this property in the way the names on the title deeds have been changed. Your brother owned it originally. then transferred to your joint names, then both of you transferred to your wife.

As Kingmaker states, it is the beneficial ownership that counts and not necessarily the legal ownership. You are certain that you transferred the beneficial ownership of your half share to your wife 'before the tax year 2002'. Questions arise from this as follows:

(1)You have not specified an exact date or even an approximate date.

(2)How did you deal with the rent for 2001-02 tax year? Did you declare rent for the full tax year or only upto a certain date? This information will have a bearing on the exact date of transfer to your wife as far as you are concerned.

(3)When is your brother supposed to have transferred his half share to your wife? Same time as you, 'before 6th April 2002' or at the time deeds were changed into her name in January 2004?

(4) If your brother is not working and not liable to pay income tax, why did he transfer his half share to your wife?

(5) Who was banking all the rent all these years? I suspect it would be you.

If I were you, I would not say anything at the moment. But you should be prepared for the inquisitive questions which are bound to follow regarding the motives behind all the transfers and the delay in amending the title deeds.

Paid professional advice is recommended.

ramnik
ramnikrp@hotmail.com