Declaration of Trust and mortgage buy to letMake Text Bigger
Hello, I am owner of a flat (alone) which I bought few years ago. I would like to buy a new flat with my wife, my current flat will be then let.
I need to convert my current flat to a “Buy To Let” (to borrow some more equity).
I am additional tax payer (45%) while my wife is basic (20%).
I have a very simple question, if you could help.
If I understand well, as my wife will take care of this flat (organize viewing, taking care of tenants etc.) I can do a declaration of trust so my wife has 99% of my current flat and me 1% and we will pay tax accordingly on the rental income. However, does this need to be done before I remortgage this flat (alone) or should I do this trust and then remortgage with both names, even though she is not on the deeds?
If I remortgage it now, does my lender need to take into account both financial situations or only mine? If I remortgage later, after the trust, will my lender check mainly her income and not on mine to rely on reimbursement?
Can I do a mortgage only on my name even there is this declaration of trust?
In the case the mortgage and the deed are on my name but there is this declaration of trust, can we still deduce the 99% interests paid from the gross income (with future law – for 2016/2017 it’s still fine)? Also, will the 40K letting relief apply for both of us when we sell?
Is there any other to optimize the situation (and to avoid to pay SDTL) ?
Further, I will be subject to the new tax 3% SDTL on my new flat. Is there a way to pay it on the value of my current and not the new? As I will do Buy to Let on this one and not on the new one which will be my main residence, it’s quite unfair that I am taxed on the new flat which will be double of the old. Will I be entitled to claim back this tax back in 2 years if I sell the current flat even I have done a BTL for 2 years?
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