transferring part of ownership to wife for tax reasons

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    transferring part of ownership to wife for tax reasons

    hello. at the moment i am sole owner of a rental property, mortgage free.
    I would like to transfer some of the ownership to my wife in order for us to split the rental income 50/50.
    I have done some research, but would like confirmation - is what I need to do a 'declaration of trust' to transfer some of the ownership of the property to my wife?
    some further questions:
    1. does the property need to be equally split between us in order for the taxation to be 50/50 on rental income? or is it enough that she owns some portion of the property?
    2. once I have the declaration of trust in place, what are the next steps? would i need to inform HMRC?
    3. can anyone recommend an affordable solicitor to draw up the declaration of trust? (I am not sure if such requests are going against forum rules, please accept my apologies and ignore this question if so)

    #2
    See this thread.
    Transfer of rental income to spouse who is lower rate tax payer?
    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
      Hi Joshua - I was the original poster that jpkeates has linked to above . Google TSEM9846 and TSEM9814. In a short summary, there are special rules for married couples, which state that when you own a property in unequal shares, even 90/10, 99/1, you will still be taxed 50/50. If you wish to deviate from 50/50 that is a whole different story. Please have a read of the posts and submit a response.
      https://forums.landlordzone.co.uk/fo...rate-tax-payer

      Comment


        #4
        thank you. I've read the thread. Thing seems to get very complicated very quickly. I too would prefer to give a nominal amount of ownership rather than 50/50. however, if there is even a tiny bit of doubt about whether this would then give a 50/50 tax bill for rental income then I'd rather just gift 50% of the ownership. it does look as though the HMRC rules are clear, although a lot of doubts have been raised on that thread. Has anyone directly asked HMRC, or is that a waste of time?

        Comment


          #5
          Never ask HMRC for tax advice.

          Ask an accountant or family solicitor.
          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


            #6
            Dear Joshua - see

            https://www.gov.uk/guidance/income-t...owned-property

            It should all be very clear, direct from HMRC site. My own case was different to yours - I had owned some property for many years - with sizeable Capital Gains - so overall there is no benefit in gifting my wife 50% of the property - I am 15.5 years older and likely to die first so I wanted to be able to leave her the property on death with no liability for CGT ( which she would have on the 50% of the property I gave her while alive). I also attach a document referring to a book by Carl Bayley. As you will know, gifting ownership is a 1 way ticket and a decision not to be taken lightly. If the read the case studies above it should remove all doubt that you can own a property as tenants in common, with your wife/civil partner, in unequal shares and still be taxed 50/50. You could always consider a mid-way approach, and gift your wife a different share less than 50% more than 1%. What you cannot do as I am sure you will know, is keep the beneficial ownership of the property and your share of the rental income in different shares. Good luck, please post up what you decide - Nigel


            Attached Files

            Comment


              #7
              thank you, the link you provide seems to clear this up. The example with Clare and Naoki shows that even with unequal owership, the taxation is 50/50 because they are married/in a civil partnership, unless they submit a form saying they want to split the tax differently. In my case I would like to split it 50/50 which makes me think that if I transfer even a small part of the ownership to my wife, we'll automatically split the income tax 50/50 - does anyone else see this differently?

              Comment


                #8
                Is it possible to transfer a small percentage of property to ones spouse when the property is mortgaged? assuming the mortgage company agrees. How would you transfer just 1% of ownership?

                Comment


                  #9
                  I'm not sure but in my case the property is mortgage free

                  Comment


                    #10
                    Originally posted by joshua View Post
                    thank you, the link you provide seems to clear this up. The example with Clare and Naoki shows that even with unequal owership, the taxation is 50/50 because they are married/in a civil partnership, unless they submit a form saying they want to split the tax differently. In my case I would like to split it 50/50 which makes me think that if I transfer even a small part of the ownership to my wife, we'll automatically split the income tax 50/50 - does anyone else see this differently?
                    Yes I think you have got that right, as in indicated in my posts. Plus a stated on the HMRC site. there are special rules for married couples (or civil partnership) - good luck

                    Comment

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