Transfer of equity on a Buy to Let – Advice Required

by Readers Question

10:08 AM, 12th December 2013
About 8 years ago

Transfer of equity on a Buy to Let – Advice Required

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Transfer of equity on a Buy to Let – Advice Required

My wife and myself jointly own a BTL which we let out. I am a higher rate tax payer but my wife is on the 20% rate. Ideally I would like to do a transfer of equity into her name to reduce our tax on rental income.

I have contacted the mortgage company and there is no charge to do this. However I am just thinking ahead to when we sell the property. As I would no longer be on the deeds I would surely loose my CTG relief. Transfer of equity on a Buy to Let - Advice Required

I guess my question is “is it best/possible to leave a small % of the equity in my name or can I simply just do another transfer of equity back into my name when we come to sell?”

Cheers

James

Comments

Edwin Cowper

21:55 PM, 18th December 2013
About 7 years ago

PS Missed one of the most important points! You have to register the severance of the joint tenancy (as it is called) at the Land Registry. Otherwise I believe the Revenue will just dismiss it as a non-event. Its a standard procedure. Fairly simple and not expensive.

Edwin Cowper

22:01 PM, 18th December 2013
About 7 years ago

PS MISSED AN IMPORTANT BIT. When you've done the severance of joint tenancy you must register it at the land registry - fairly simple, low cost. If you don't I expect the Revenue will disregard it and any subsequent changes of percentages (another short document is required for that but you need accountants / lawyers advice because it has important tax consequences -in fact as Mark said - all of it does)

Edwin Cowper

19:01 PM, 21st December 2013
About 7 years ago

If one of you does give notice to the other to sever the joint tenancy, ie create a tenancy in common in equal shares -then you MUST register the notice at the land registry (not difficult nor expensive). If you don't I would expect the Revenue to say there has been no election to hold as tenants in common in equal shares

Then of course you can change the percentages held.

But you need legal or accountancy advice in this area before changing from joint tenants

Puzzler

7:53 AM, 30th December 2013
About 7 years ago

Reply to the comment left by "allan wadsworth" at "15/12/2013 - 11:46":

I have checked and from the HMRC website:

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. The share for tax purposes must be the same as the share actually agreed.

However, where the joint owners are husband and wife, or civil partners, profits and losses are treated as arising to them in equal shares unless:

both entitlement to the income and the property are in unequal shares, and
both spouses, or civil partners, ask their respective tax offices for their share of profits and losses to match the share each holds in the property.

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