Joe Edward

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Friday 6th January 2017

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Joe Edward

10:12 AM, 6th January 2017, About 5 years ago

Help with passing property rental to my wife for tax purposes

Hi Terry -

No - you are not transferring legal title to the property. All you are doing is splitting the beneficial interest to the rental income. This can be achieved by a short form declaration of trust pursuant to which you and your wife agree to split your interest to the rental income (e.g. 99.9% to her 0.01% to you). Legally speaking, it is a very simple document and any high street solicitor should be able to do this for around £200 plus VAT (I expect you can find this even cheaper if you are so inclined to shop around). It does not need to be registered at Land Registry. You (together with your wife) will remain the legal owner of the property and your interest in the capital will be unaffected (unless you decide otherwise). One point you may wish to consider is to include a clause in the declaration of trust enabling any party to revoke the arrangement without cause upon say 2 months notice after which time interest in the rents would revert to 50/50 split. This is to mitigate any possible issues on the unlikely event of a divorce etc.

One final point - assuming you are currently holding the properties as joint tenants this act will sever the joint tenancy and, you will, going forward be deemed to hold the properties with your wife as tenants in common. The key difference is that there is no right of survivorship (i.e. when you or your wife dies your/her interest in the property will not automatically vest in the surviving partner but will be dealt with in accordance with the terms of any existing will). For completeness, you may wish to consider having wills produced which guarantee that upon death the interest in the properties will vest in the surviving partner.

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