Tenants in Common v Declaration of Trust

by Readers Question

8:40 AM, 23rd August 2019
About A year ago

Tenants in Common v Declaration of Trust

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Tenants in Common v Declaration of Trust

Hi, I know there are lots of questions and answers on this topic but just trying to find the right solution for me. I am married and me and my wife have our own joint home

Before marriage I bought a BTL property, both the property deeds and the mortgage is in my name only. Nothing in the wife’s name
Property value is about £250k. Mortgage is Interest Only, and outstanding Mortgage balance is approx £120k.

I am a high earner, so I pay 40% on the property Income. My wife on the other hand, works a few days a month, so very low earner. I would like to show majority of the BTL income as received by her, say 99% or even 100%, as she manages everything to do with the property and has no real major income otherwise.

I was told by a Prop Tax person that all I need to do to do this, is by utilising a Trust Declaration, and you simply agree 100% beneficial interest with your wife and she can then receive all the rental income. That’s it, not much more and then my wife does a tax return showing the income. Is this correct?

Also he said, having a rental property is classed as a business. The mortgage interest payments are an allowable business expense against the rental income. It is irrelevant who is named on the mortgage since it is deducted as an expense from the rental income. The important aspect is the question of who receives the net income after deduction of the relevant expenses. So I wouldn’t need to change the mortgage deeds, she can deduct the expenses on her Tax return, again does this sound right?

I was planning to change the mortgage deeds/property deeds into joint ownership and then at the same time do a Tenants in Common agreement so that she receives 99% of the income. But this is obviously more complex, so if I can do what the Tax person above said, that would be much simpler.

Any help would be appreciated


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Neil Patterson

8:44 AM, 23rd August 2019
About A year ago

A Response from Mark Alexander (on holiday)

Dear Sammy

Both options appear to be feasible ‘in-principle’ but without a full consultation it is impossible to say for sure.

Is the person advising you qualified and regulated to do the necessary conveyancing work, and if so, does he/she also have Professional Indemnity insurance? If so, you should be fine.

With the benefit of a full consultation and a referral to Cotswold Barristers to deal with the legal work I am quite certain that we would be able to assist you, but that probably isn’t going to be economical for you given that you only have the one property. We did lots of this type of work historically, but given the demand for our tax planning services from property rental business owners with multiple properties it is unecomonical for us now too.

Neil Patterson

8:49 AM, 23rd August 2019
About A year ago

Please also see our Declaration of trust page >> https://www.property118.com/declaration-of-trust/


9:21 AM, 23rd August 2019
About A year ago

Thank you for your feedback Neil. To be honest, initially I didn't look into the tax persons qualifications. For now I was just trying to clarify if I can use a Declaration of Trust to show the BTL property income as received by my wife as the beneficiary, even though the property and mortgage deeds are in my name only. I will have a look at the link you provided.

Any other feedback from others would also be appreciated



16:34 PM, 3rd October 2020
About 3 weeks ago

Hi Sammy

A decent article here to give you a good insight on the issue - there's a specific section dedicated to considerations for tenants in common when considering a Declaration of Trust: https://www.elitelawsolicitors.co.uk/declaration-of-trust-for-property/

Hope it helps!

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