How to tax expenses and interest in joint house (husband/wife)

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    How to tax expenses and interest in joint house (husband/wife)

    Hello.

    I need some advice so please for help.

    My husband has bought a house (BTL), the title and the mortgages are in his sole name.
    Then he has split the house 90%-10% (DoT) in my favor, the mortgage hasn't been change.
    We've sent Form 17 to HMRS but haven't notified Land Registry, neither the lender.
    1. Do we have to notify Land Registry or lender?
    2. Can only my husband offset mortgage interest against rental income or it has to be split between us in 90%-10%?
    3. How do we have to split the rest of expenses? Each of us - he or I have paid randomly for an inventory, gas certificate, insurance, fees, council tax, bills etc. from our own accounts (not joint).
    Do we have to add all expenses up and then split them into 90-10% or each of us has to deduct exactly what he's paid for?

    Thank you

    #2
    Just asked Hmrc yesterday regarding this on their webinar meeting, you can't split income if your husband is sole owner. It can be split only since the date your name is added on deed.

    Comment


      #3
      Your husband can't change the percentage ownership with a simple deed of trust.
      It's possible to construct a trust to (effectively) own the property, but the trust would be the owner, not as described.

      A trust as - I think - your husband has tried to set up can only change the beneficial ownership share of a jointly owned property.
      So the form 17 is actually wrong and should be withdrawn (otherwise it's possibly going to get your husband in trouble).

      1 - You (probably) can't change the beneficial ownership shares without the mortgage lender's permission.
      You (almost certainly) can't change the title ownership without their permission (and probably you both being on the mortgage).
      You will need to change the title in order to do what you have tried to do (unless you go down the more complex trust route).

      2 - is academic, because it's not possible - but you split the expenses in the same proportion as the ownership. Provided you are both the landlord - changing the title of the property doesn't change who the landlord is, that's a separate thing.

      3 - as 2.

      Essentially, unless the information given in the first post is incomplete or wrong, the husband hasn't actually done anything and should probably get some professional 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


        #4
        If the property is registered under both names ( H & W) as " joint tenants" at Land Registry, both tenants have legal entitlement to the property. The Tax Office will assume the joint income is shared 50:50 and each person must declare 50% income in their tax return. The Tax Office allows the income to be shared differently by producing a "Declaration of Trust" and to inform HMRC by Form 17 within 60 days of signing DOT.

        If the property is registered under husband name only, then the total income must be reported on husband's tax return only.

        If the property is registered under both H & W names as "tenants in common" at Land Registry, the income is distributed according to % fixed in the registration at Land Registry and same % must be reported in the tax return submitted by each part owner.

        Comment

        Latest Activity

        Collapse

        • Maintenance payment flow of funds
          Kots
          Hi all,

          I am one of three flats and I own a share of freehold. We've setup a company to deal with the day-to-day matters such as maintenance payments and such.

          One of the freeholders, who is also a director of the company, usually arranges quotes for maintenance works and insurance...
          15-10-2019, 05:10 AM
        • Reply to Maintenance payment flow of funds
          Kots
          Thanks for your replies.

          We are tenants in common and although the initial idea was to pay funds in advance, I am not for this so the plan would be that funds are paid as they are required.

          What about HMRC, does anybody know if I'd be unable to offset these payments against...
          16-10-2019, 14:08 PM
        • Reply to Maintenance payment flow of funds
          leaseholder64
          I'm not clear as to whether the company is the actual freeholder, or you are tenants in common. In the latter case, setting up a company is an unnecessary expense, which probably cannot be fully funded from the service charges.

          Also I'm not clear as to whether any service charges are paid...
          15-10-2019, 10:09 AM
        • Reply to Maintenance payment flow of funds
          Gordon999
          It is better for the service charge money to be kept in a separate current account because the bank statement records can be made available for inspection by any leaseholder. The unspent service charge money / funds should not be mixed with a business account belonging to one of the leasehol...
          15-10-2019, 07:05 AM
        • CGT Relief for PP ?
          JimmyJ
          This relates to a property that was our family home for a number of years then which we rented out for a number of years and which we then sold. I understand about the CGT reliefs for private residence and rental periods. But when we put it on the market we were advised by the agent to a) repaint the...
          12-10-2019, 08:38 AM
        • Reply to CGT Relief for PP ?
          Gordon999
          The work ( painting rendering ) was requested by the estate agent and should be charged as a " sale preparation cost " . This cost should be treated as similar to estate agent's commission and advertising cost , and charged against the sale price ....
          12-10-2019, 21:01 PM
        • Reply to CGT Relief for PP ?
          AndrewDod
          Disagree with you on this one JP. HMRC give pretty clear examples:

          Explanation A repair to an asset restores it to what it originally had been and is normally an allowable revenue expense. For example the cost of replacing roof tiles blown off by a storm. The cost of alterations, however,...
          12-10-2019, 19:12 PM
        • Reply to CGT Relief for PP ?
          JimmyJ
          Just to clarify. It was empty at the end of the previous tenancy because the tenants didn't want to renew for a short period and I didn't want to renew for a year , so as not to compromise the sale. During the empty period I tried to let it short term but that did not happen....
          12-10-2019, 13:16 PM
        • Reply to CGT Relief for PP ?
          jpkeates
          A property remains part of a rental business until sold*, even if the last tenancy ends some time previously.
          Painting to increase the capital value can be a capital expense (or could equally be maintenance).

          *Or the landlord moves into it, converts it to a holiday let etc etc.
          12-10-2019, 12:47 PM
        • Reply to CGT Relief for PP ?
          AndrewDod
          Although painting is never a capital expense unless it is something highly unusual. Not everything is a capital expense - especially if it replaces or maintains something that was there. If the repair is something that tends to be reoccurring or could be recurring -- repair of existing appliances,...
          12-10-2019, 11:30 AM
        Working...
        X