Rental Income – Sole Owner’s main residence?Make Text Bigger
Hi, I have read several threads on property 118 forum and found very helpful and informative. I have bought a flat in 2017 in my sole name for our main residence. I lived there for one year with my wife and two daughters.
Due to my job change, I have moved out from this property in 2018 and let it out immediately after that. I am receiving the rental income in my wife’s bank account. I am in full-time employment and a higher rate taxpayer @ 40%. My wife doesn’t have any income as she is not working. I have £270,000 mortgage outstanding and still, I have residential mortgage on this property.
1) Since I have to move out from this property due to job change, is there any way I can claim the rent expenses that I am paying on my residence now. My argument to claim rental expenses is, Had I not been moved out due to job change, I wouldn’t incur the rent expenses for my new residence, and I wouldn’t earn the rental income on the property that I own. Hence, I believe that there is a direct connection between the rental income I am getting and rental I am paying for my new residence and should be allowed as an expense.
2) If the answer of above is no, can I say that all the rental income belongs to my wife as she is receiving it in her bank account? I read some threads on this forum and found deed of trust is the way to make wife beneficial owner and this deed of trust is not required to submit with HMRC. In this case, I am not sure how HMRC would come to know that the wife is the beneficial owner? Or there is no need to tell HMRC and I can simply file my wife’s self-assessment return showing 100% rental income in her name.
3) If I make wife as 100% beneficial owner, then I think I don’t need to file my own self-assessment return. I can just file wife’s self-assessment return.
4) I have found some contradictory information about Stamp duty liability if I make my wife beneficial owner using deed of trust. I have spoken to a local solicitor and she said that there is no stamp duty liability even if I make wife 100% beneficial owner of property and rental income but in this forum, it’s clearly mentioned that if mortgage is outstanding then stamp duty would be payable.
Would really appreciate your valuable advice.
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