Declaration of Trust twice?

Declaration of Trust twice?

9:23 AM, 9th August 2016, About 5 years ago 12

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I purchased a property in 2007 with my Mother. My Mum’s name purely went on the mortgage for loan purposes (as her salary allowed me to get a larger sum). I have always paid all expenses and lived at the property. This month we completed a Declaration of Trust to state that I own 100% of the property.burger

I have recently rented the property and am nervous about the new tax laws coming into place in 2017 which will mean the Interest Only portion (a considerable amount) is not deductible (which in-turn means a considerable tax bill). My husband who works for our Church and has a very minimal salary (hence why his name was not on the mortgage initially) still has a tax free portion of income we could use if I were able to complete another ‘Declaration of Trust’ and to gift him 99% ownership.

Is this possible and legal? (Essentially to have completed a Declaration of Trust stating my personal ownership of 100%, despite my Mothers name being on the mortgage with mine. And then now owning 100% to complete a second Declaration of Trust gifting 100% of the property to my husband?).

I look forward to hearing from you.

Thanks so much in advance.

Susie



Comments

by David Mensah

7:31 AM, 15th August 2016, About 5 years ago

Also, if you transfer 100% to your Husband, then you can't deduct the mortgage interest. At the same time, if he is not on the mortgage, then i'm pretty sure he can't deduct the interest either. There may be a medium where you transfer part to him so that you can still deduct mortgage interest.

Worth talking to a good accountant --

Note that in my experience not all accountants understand these issues very well either, may be worth looking into one or two recommended by this portal who do.

by Sue Richardson

13:05 PM, 18th August 2016, About 5 years ago

Thank you so much everyone for your comments.

I have actually found an earlier post on this site from someone wanting to put the rental income under their spouses name for tax purposes (who's name is not on the mortgage) here:
https://www.property118.com/putting-property-husbands-name-tax-relief/72149/

This is essentially what I was hoping to do. Mark had responded to say a 'Declaration of Trust' would be possible and no CGT would be payable between spouses. The process sounded quite simple.

Below I have tried to re-clarify my circumstances:
My husbands income is currently just £4000 (my understanding is that he still has £7000 tax free allowance).
The income from the property is approx £4000 per year (With the introduction of the new Buy-to-Let tax this income will gradually increase over the next 4-years as the full 100% interest only portion of the mortgage will no longer be deductible as an expense).
As a 20% tax payer, I would like to complete a new 'Declaration of Trust' gifting him 99% of the property so that this income could be listed on his personal tax return.
My husbands name is not currently on the mortgage.
Mine and my mothers name are listed on the mortgage and via a Tenants in Common agreement and previous Declaration of Trust, I am listed as holding 100% proceeds and my mother 0%.

Having read the article noted above, I think it sounds like the 'Declaration of Trust' option for tax purposes would be feasible and also quite straight forward in this situation too. If you are able to clarify whether you agree, that would be wonderful. Apologies, if I did not make the above clear when posting my original question.

Thank you so much again.


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