Putting a property in my husbands name for tax relief?
Hi all
Your help would be greatly appreciated.
I am currently an owner occupier and own one property only which I have owned for almost 3 years. I bought the property when I was single and I have since become married. I still own the property in my own name. My spouse and I put a deposit down on a second home which is not due to be complete until 2016. In the mean time, we want to rent our place out quickly to start saving some cash. I am a 40% tax payer yet by husband is a 20% tax payer. Am I able to gift the property to my husband (via a solicitor) and have the rent coming into his account ensuring that we only need to pay 20% tax rather than 40%?
If this possible, is there any effect on capital gains tax at all?
My mortgage deal is up in March so this would end and then we would do the transfer. Additionally, do you know if banks openly accept first time landlords with new properties in their name? I read that some can be funny for first time landlords if you have not had possession of the property for 6 months?
I would love your advice
Thanks
Mrs A-S
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Member Since July 2015 - Comments: 6
12:10 PM, 8th July 2015, About 11 years ago
Many thanks Mark.
Member Since July 2015 - Comments: 2
4:25 PM, 26th July 2015, About 11 years ago
Reply to the comment left by “Mark Alexander” at “08/02/2015 – 09:44“:
Hi Mark,
I have contacted these guys – http://buytoletconveyancing.co.uk/declaration-of-trust/
I am wondering if there is any requirement to notify your mortgage provider or the land registry if you use a declaration of trust?
Apologies if this has been covered already, I couldn’t spot it.
Thanks for your help
Member Since January 2011 - Comments: 12193 - Articles: 1396
10:17 PM, 26th July 2015, About 11 years ago
Reply to the comment left by “Vince Walker” at “26/07/2015 – 16:25“:
Not usually but you will receive professional advice on this if you contact our recommended lawyers.
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Member Since February 2016 - Comments: 3
4:33 PM, 11th February 2016, About 10 years ago
HI Mark – I am in a similar situation to this. I have 3 buy to let properties in my name. With the new ‘Landlord tax’ being introduced from next year it will push me into the 40% tax bracket and hammer me for a lot more tax! Thus I am considering doing a declaration of trust to my wife (who works part time not earning much). I contacted the people you linked who were very helpful, but have a few questions which they could not answer:
1. Is what I demise to her rental income or rental profits? eg. If I give 50% to her and we receive £2000 rent and pay £1000 mortgage, does she declare £1000 or £500.
2. As I understand only myself as the name on the title can pay the mortgage and thus offset it from my tax bill. so in the example above would I declare £1000 income and offset £1000 mortgage, £1500 income and offset £1000 mortgage, or can I only claim 50% of the mortgage as the other half is demised to my wife?
Thanks for any help on this – its very confusing!
Member Since January 2011 - Comments: 12193 - Articles: 1396
8:16 PM, 11th February 2016, About 10 years ago
Reply to the comment left by “David Pilcher” at “11/02/2016 – 16:33“:
Hi David
Your accountant should deal with this for you, please ask him/her.
My understanding is that the percentage of the rental profits now owned by your wife are what you declare of the tax return. Therefore, if you gave your wife 100% of the beneficial interest her accounts would now show that she is responsible for all income and expenses including mortgage interest, even if that mortgage is “technically” still in your name and still debited from your bank account.
It can be a bit difficult for people to get their heads around beneficial interests and legal interests. I will try to explain …
Your wife will benefit from her ownership of the property, ie her share of rental profits, equity and capital growth. Whilst the mortgage is in your name, the bank count could be in either your name or your joint names.m, it really doesn’t matter. HMRC are only interested in who receives the benefits, is the profits.
The legal interest in the property is of no consequence to HMRC. It is only of interest to your mortgage lender because that’s how they can get their money back in the event of default. Even if they were to repossess. Any equity left over post sale would be shared in accordance with the beneficial ownership.
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