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

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  • 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

  • Gordon999
    replied
    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.

    Leave a comment:


  • jpkeates
    replied
    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    So the form 17 is actually wrong and should be withdrawn (otherwise it's possibly going to get your husband in trouble).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.

    Leave a comment:


  • streetwize
    replied
    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.

    Leave a comment:

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