Buying BTL and declaration of trust?

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    Buying BTL and declaration of trust?

    Hi there

    I'm buying a btl with my partner (not married)

    i believe we can do the mortgage under tenants in common (as opposed to joint tenants), then sign a declaration of trust to adjust the income split 99:1 (instead of 50:50). She's doesn't work.

    Is it that simple please?

    What is the cgt implication please? Are we worse off when we come to sell?

    #2
    That's necessary for married couples.

    As unmarried partners you can purchase as joint tenants (which is probably better for you in some other ways) and decide how you split the income.
    You should probably document the income split and both sign it.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      As you are not married, HMRC will look for the real beneficial ownership of the property. The factors such as who put down the deposit, who receives and spends rent, etc will become important. So, if your partner owns 99% of the house, then there would not be any issue from HMRC. But, this means she will be an owner of 99% of the property and you may need to consider the legal implication of this.

      Between spouses and civil partners, this would be a matter of simply filling a form (called Form 17) and submitting to HMRC. For CGT, you can transfer ownership between spouses before sale without any issues.

      Comment


        #4
        Which is why joint tenants is the better route.
        There's no defined split in ownership.

        How the business then arranges its affairs is then, more or less, up to the business.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment


          #5
          Many thanks

          So aside from ownership implications if we ever split up, surely HMRC will be happiest in assessing rental income if we have a tenants in common ownership 99:1?

          Then rental split follows ownership split?

          Also if we get married it'll need to swap to tenants in common anyway to get the unequal split?

          Comment


            #6
            There are other differences between married couples and non-married couples that kick in.
            You need to look at the totality of the situation, not focus on one part of it.

            If you are married and one of you dies, the surviving spouse inherits the deceased's property automatically.
            If you are not married and one of you dies, that doesn't happen.

            If you own as tenants in common and one of you dies, the proportion the deceased owns follows their will, or in its absence, the default intestate route.
            So the proportion of ownership could be lost to the partnership (who paid for i) if one of you dies.

            So being joint owners (where the remaining partner automatically acquires full title if the other partner dies) is very advantageous for an unmarried couple and isn't something you need to consider (in this context) for a married couple, so the advice would be very different.

            The tenants in common split looks simplest for tax purposes, but also has other implications.
            Getting a joint mortgage with a 99:1 split is much more difficult (in many cases impossible), for example.

            Getting the title and beneficial split different is just asking for trouble.
            Heaven forbid if you fall out and split up, how likely is it to be able to amically reset the title ownership from 99:1 to 50:50?

            But get proper advice, you don't want to get this wrong - properties are more expensive than legal advice.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment


              #7
              Many thanks, yes I had read the bit about if one of us dies etc.

              Ok we'll go for the standard joint tenancy, as I believe we can simply draw up a document for her to get 100% income anyway from what's been said here (and other threads)

              Comment

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