Joint owners but with different entitlements to rental income
I have a few properties owned jointly with my wife and have always split the rental profits 50:50. However, my accountant suggested for tax planning (I am a higher rate taxpayer and my wife is a non-taxpayer) all the income should be allocated to my wife. To do this, all we need to do is open a bank account in her sole name, transfer the rental income and the mortgage costs etc across to this account then 100% can be shown to be hers. Don’t even need to inform HMRC.
However, I noticed some articles regarding completion of Form 17 for HMRC and notifying them of the transfer of income. Also some reference to SDLT and CGT, although no CGT should be due as none of them have increased in value.
I trust my accountant but the articles suggest the advice is different.
Apologies if this has been raised before but can anyone assist or point me in the right direction?
David
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Member Since November 2015 - Comments: 6
8:05 PM, 30th March 2016, About 10 years ago
Probably comes under joint ownership with no partnership.
http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm
Jointly owned property – no partnership
Where there is no partnership, the share of any profit or loss arising from jointly owned property will normally be the same as the share owned in the property being let. But joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property
Member Since September 2015 - Comments: 1
9:28 AM, 31st March 2016, About 10 years ago
Many thanks to all for the comments to clarify in reality what can be done. I will take it a stage further and get the documents produced professionally.
Member Since March 2015 - Comments: 2
12:14 PM, 31st March 2016, About 10 years ago
Afternoon, slightly different income question. I rent out a room in my property and the property is owned jointly with my husband. However we used to split income 50/50 and split rent a room relief 50/50. My husband and I are now separated and he lives in his own property whilst I still rent a room out in the jointly owned property. The income is now paid to me. Does he need to declare anything as still jointly owns property or can I claim full rent a room relief and income over that amount as 100% to me?
Member Since August 2014 - Comments: 46
1:05 PM, 31st March 2016, About 10 years ago
Your husband is the beneficiary of half the rental income if on joint tenancy ownership and should declare to HMRC. Also the rent a room relief is on main residence and your husband should not be eligible for relief if it’s not his main residence. Your husband needs to transfer all beneficial interest to you for you to claim 100% relief.