Dead of severance?
9:33 AM, 6th October 2016, 10 years ago
3
Categories:
We are considering changing our property’s from Joint tenancy to Tenants in common. I am a higher rate tax payer, my wife is retired. The 1% / 99% split respectively.
Would we be allowed to allocate the income therefor reducing our tax liability.
Many thanks
Alan
Comments
Have Your Say
Every day, landlords who want to influence policy and share real-world experience add their voice here. Your perspective helps keep the debate balanced.
Not a member yet? Join In Seconds
Login with
or
Next Article
Shelter's Position on the Tenant Tax
Member Since February 2011 - Comments: 3453 - Articles: 286
9:38 AM, 6th October 2016, About 10 years ago
Hi Alan,
Please see our page Ownership restructuring for tax purposes >> https://www.property118.com/ownership-restructuring-tax-purposes/
“It is very common for properties to be owned by just one person, or indeed on a Joint Tenancy basis where the property was purchased by more than one person, e.g. two brothers or a husband and wife. Sometimes this is not tax efficient in terms of splitting sale proceeds or rental profits and often causes issues in divorce too.
Changing the legal title is the best known way to deal with this problem but it is rarely the most efficient, especially if you already have a mortgage in place that you do not wish to disturb, not to mention costs.
A Declaration of Trust enables the ownership of equity and rental profits to be adjusted and legally documented without disturbing the legal title or existing mortgage arrangements.”
And for reference purposes as I know some people get confused on the difference:
The type of ownership affects what you can do with the property if your relationship with a joint owner breaks down, or if one owner dies.
As joint tenants (sometimes called ‘beneficial joint tenants’):
you have equal rights to the whole property
the property automatically goes to the other owners if you die
you can’t pass on your ownership of the property in your will
Tenants in common
As tenants in common:
you can own different shares of the property
the property doesn’t automatically go to the other owners if you die
you can pass on your share of the property in your will
Member Since January 2011 - Comments: 12209 - Articles: 1405
10:48 AM, 6th October 2016, About 10 years ago
Yes, use Form 17
Speak to your solicitor or accountant
.
Member Since November 2013 - Comments: 1130 - Articles: 2
6:33 AM, 7th October 2016, About 10 years ago
Yes, you can get your solicitor to draw up a declaration of trust re-distributing the shares between you both in any way you want, 1/99% being the most tax efficient. You then need to simply apply to Land Registry who will place a restriction on your title register stating that you own as tenants in common and how this affects the shares should in the event of the death of one or both owners.