Help with passing property rental to my wife for tax purposes

by Readers Question

9:39 AM, 6th January 2017, 9 years ago 28

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Landlord News Landlords Questions

I own two flats for which up until now I have been receiving the income and declaring it under self assessment. I now have some extra earnings which take me into 40% tax.

I want to pass the property income solely into my wife’s name for tax purposes as she only pays 20%. I have been advised to send HMRC a Form 17 to show that she now gets 100% of the income.

The bit I need help with is this – we jointly own the two flats and it says that I need to produce evidence by way of a declaration of deed. Does this mean that I’m transferring the title deed to my wife solely?

How much does this cost and does it have to be done by a Solicitor? Or am I only transferring the tax requirement to her fully which is what I want?

A final point is that we deliberately bought the two flats jointly so that when we come to sell either we can use both of out CGT allowances. If I sign over the tax liability to my wife am I also then losing out on the joint CGT? Hoping someone can help!?

Terry

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John Constant Read Full Bio

Member Since September 2013 - Comments: 104 - Articles: 3

1:08 PM, 10th December 2018, About 7 years ago

Reply to the comment left by Mark Alexander at 10/12/2018 – 12:11
You are quite right for this particular case Mark, but I wanted to draw your readers attention to the situation where a sole owner passed beneficial rental income to a spouse.
My client did this without fully considering the implications for the portfolio, and left himself pretty much high and dry.

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Paul Harsley

Member Since March 2015 - Comments: 11

1:23 PM, 10th December 2018, About 7 years ago

When they come go remortgage couldn’t they simply go into joint names removing these problems?

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John Constant Read Full Bio

Member Since September 2013 - Comments: 104 - Articles: 3

2:23 PM, 10th December 2018, About 7 years ago

In my client’s situation, it would’ve raised a whole load of other problems regarding taxation costs etc. It would have been throwing the baby out with the bath water. As I said in my original post, I found a lender who accepted the AST value, rather than what the client actually received in his bank account.

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Neil Patterson Read Full Bio

Member Since February 2011 - Comments: 3453 - Articles: 286

2:42 PM, 10th December 2018, About 7 years ago

Everyone’s tax circumstances are individual and bespoke to them. That is why we recommend they seek a consultation with Mark Alexander and or seek advice from Mark Smith (Barrister-At-Law)

9 Report Comment Reply
Haresh Bhatia

Member Since December 2018 - Comments: 1

7:32 PM, 29th December 2018, About 7 years ago

Dear All,
My Wife & I jointly own a house and its just been under a year(2018), we have rented our house and are receiving rental income. As part of 2017/2018 tax returns, for the first time I will be declaring the rental income under self assessment. I’m currently a high tax payer and my wife is a house-wife. I want to pass the property rental income solely into my wife’s name for tax purposes as she has no income. I have been reading the entire thread in this forum and also visited various other forums and to some extent on HMRC website, that I can send HMRC a Form 17 to show that she now gets 100% of the income ? is that true ? The bit I need help with is the process around it. Do I need to go through a solicitor or can I do it myself ? Will this help me for 2017/2018 self-assessment ?

many thanks in advance for your help.

regards
Haresh

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Paul Harsley

Member Since March 2015 - Comments: 11

8:00 AM, 30th December 2018, About 7 years ago

Your on the right track but it’s not just the form 17. You need to ensure you are tenants in common (at the unequal split( not joint tenants. If you’re not you can do this easily yourself.

https://www.gov.uk/joint-property-ownership/change-from-joint-tenants-to-tenants-in-common

Then form 17, but you need to consider a Declaration of Trust and SDLT based on the amount of consideration.

https://www.gov.uk/stamp-duty-land-tax/land-and-property-transfers

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Paul Harsley

Member Since March 2015 - Comments: 11

8:03 AM, 30th December 2018, About 7 years ago

Reply to the comment left by Paul Harsley at 30/12/2018 – 08:00
It’s also worth noting as discussed in this and other threads, you cannot simply transfer the income. You must transfer either the legal title or the beneficial ownership into the same unequal split between you.

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Mark Alexander - Founder of Property118 Read Full Bio

Member Since January 2011 - Comments: 12193 - Articles: 1395

8:19 AM, 30th December 2018, About 7 years ago

Reply to the comment left by Haresh Bhatia at 29/12/2018 – 19:32
I agree with everything Haresh has said above.

Mark Smith at Cotswold Barristers can complete all of the legal work necessary and advise you on the Stamp Duty position for just £250 + VAT.

You can contact him via his member profile, which I have provided a link to below.

https://www.property118.com/member/?id=1945

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