Can spouse claim mortgage interest as an expense

HI guys – I have exactly the same question too. however the answers I’ve had so far seem contrary to what is been shown on this forum.

I asked the property trust conveyancers mentioned on this forum (http://buytoletconveyancing.co.uk/declaration-of-trust/) and they seemed to think that mortgage interest would not be offsetable in my wife’s name via a declaration.

Plus I had the following response from my financial advisor which also confirmed this.

This is what he said:
“If you proceed in the way you have mentioned (i.e by keeping the mortgage solely in your name and not transferring any part of it to your wife) only you would get any tax relief for the mortgage interest and this would be proportionate to your qualifying investment (i.e. at 1%.) It would need to be a joint mortgage for you both to gain the benefit of the tax relief.

However if you do make it a joint mortgage, you then have a problem that the amount of loan interest that your spouse takes on is deemed to be consideration for stamp duty purposes and therefore stamp duty would be payable on any liability that your wife took on from you. But this would mean your wife would be able to claim 99% of the mortgage interest and you would still be able to claim the 1%.”

However if they are wrong and there is a way to do this, structuring the declaration of trust in such a way, please please let me know, as at the moment all the advice Ive had is saying no!

Reply to the comment left by “David Pilcher” at “06/04/2016 – 21:02“:

maybe you can proceed like this:
– repay any mortgage on the property (or let only 250k mortgage outstanding on it)
– add your wife as co-owner (joint tenants) of the property -you/she shouldn’t pay any SDLT as 250/2=125k (not sure how the new 3% stands however..)
– remortgage the property with a buy to let to extract equity
– then do a declaration of trust 99%/1% with your sollicitor

Can anybody comment if it would work (assuming your wife is at 20% tax band and you are 40%) to :
– no pay any SDLT
– be able to remove 99% of interests paid on the mortgage for the taxable income
– pay 20% of income tax on this 99% of the gross rental income (ie rental minus interests as above)

Reply to the comment left by “David Pilcher” at “06/04/2016 – 21:02“:

Hi David

Buytoletconveyancing.co.uk is a joint venture between the owners of Property118.com (I am one of four) and Hawkins Ryan Solicitors.

Who did you speak to there please? I will get to the bottom of this for you.

I also recommend you speak to my accountants.

With regards to SDLT there would not be any because the transfer of beneficial interest is recorded at a zero value between spouses. Therefore, your broker is definitely wrong. I was a broker for 31 years and the founder of the UK’s largest BTL finance brokerage which ranked at #38 in The Sunday Times Profit Track 100 the year before I retired from financial services. I know my stuff in this regard.
.

Thanks for getting back so quick!

I spoke with Jenny Bennett from Hawkins Ryan, she questioned my wife’s ability to offset the mortgage, which was then confirmed by my financial advisor. (although they could be wrong)
This was only the case if the mortgage was in my sole name, which all my buy to lets are, where as suggested above are too higher value to be paid off in any amount at the moment.

Also I think it is the new 3% SDLT that will affect me adding my wife to the mortgage, as she is also on our residential mortgage so would then own 2 or more.

Thanks for your help.

Reply to the comment left by “David Pilcher” at “07/04/2016 – 08:40“:

Hi David

I suggest you escalate this matter to the Senior Partner of Hawkins Ryan and ask him to review my advice and talk to me if there are any discrepancies. I am 100% certain about the advice I have provided you. His name is Paul Sheerin.
.

Reply to the comment left by “Mark Alexander” at “07/04/2016 – 10:04“:

mark im interested in these deed of trust and have been ringing and emailing through your web site for 2 days now and still no one as contacted me , not a very good advertisement in my opinion regards ts

Hi Tony,

I can see we got your enquiry this morning. My apologies you have not been contacted straight away, but I will forward on you details and get one of the team to call you tomorrow.

Reply to the comment left by “Neil Patterson” at “07/04/2016 – 19:27“:

neil thanks for your quick response, my phone will be off upto 12pm , any time after that would be great cheers ts

Thanks Tony I have emailed the team to let them know 🙂

Neil very disappionted , over 3 days and 2 calls i personally made to secretary and you telling me they would get in touch with me and still no contact with me ,well if they are this slow to respond to someone im glad i didnt go with them . i was interested in 4 deed of trusts , tell them not to bother ringing me now im going elswhere ,they obviously to busy regards ts