Sole owner of property, splitting income with Wife

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    Sole owner of property, splitting income with Wife

    Hello,

    can someone please advise on this scenario:

    1. I own the property and my name is on the mortgage and the title
    2. Can I split the income with Mrs 50/50? (married partner).


    I am getting told if i were to die then the property will goto Mrs and therefore any rental income is 50/50 split......

    #2
    Whoever told you that is wrong.

    If you want to split the revenue, you will have to split the ownership of the property (and probably put your wife on the mortgage).
    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
      No you cannot split the income/revenue

      If you were to die the property may be left to your wife under your will if you have not already done this , maybe thats what they were trying to say to you , but its not hers yet

      Comment


        #4
        I have recently done this starting this financial year. I had a deed of trust drawn up which cost around £250. You then submit this to HMRC along with form 17 informing them of your proposed split, 50:50, 99:1 whatever it says in the deed of trust. I have received a letter back from HMRC confirming the new arrangement as well as my wife receiving her own letter. My wife does not own any of the house in terms of being on the deeds of the property, she is not on the mortgage either. There appears to be no requirement for this from HMRC.

        Everyone on this forum is adamant you cant do this, but my solicitor and HMRC are happy with what i have done which is the main thing!

        Comment


          #5
          I suspect that that means is that you're in breach of your mortgage terms which won't allow you to vary the beneficial ownership without the lender's consent - because that changes the security for their lending.

          I remain of the opinion that you have to have some form of joint ownership to use a deed of trust and form 17, in fact, the online version of Form 17 explicitly says so.

          I would be concerned that HMRC has simply accepted an invalid form 17 and that your tax returns are going to be wrong.
          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
            I asked my solicitor in writing to confirm if my wife needed to be on the deeds of the house and they confirmed in writing that she does not. The title of the deed is 'BASIC DEED OF TRUST FOR LEGAL AND NON-LEGAL OWNER' so i assume that the deed makes my wife a non legal owner, but an owner nonetheless and therefore we are joint owners and do meet the requirements of Form 17.

            I followed the advice of a solicitor and HMRC accepted the form so i have no reason to doubt any of it.

            Comment


              #7
              From the sound of it, that deed simply documents the split in beneficial ownership (which is not a problem for HMRC, because tax follows the beneficial ownership).

              But that kind of deed and change of beneficial ownership is an issue where you don't have a joint mortgage because your lender (almost certainly) needs to consent to the change, because your share of the property has changed, and that share is what the mortgage is secured against.

              If you have a joint mortgage, the change in beneficial ownership doesn't matter to the lender.
              If you have a joint mortgage, you both need to be on the title.

              Interesting to read about these basic deeds for people without a mortgage, though.
              You live and learn.

              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


                #8
                Realistically, how would the mortgage company ever find out?


                Comment


                  #9
                  That's a different question.

                  When you want to remortgage, you will either have to come clean or commit another fraud on the application.
                  Other than that, if you die or divorce it might create a bit of a mess.

                  Your solicitor should have advised you about this and, ideally, not completed the deed.
                  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


                    #10
                    The guide issued by hmrc says Form 17 is intended for altering the distribution of rental income for "property jointly owned 50:50 " by husband and wife ( which should mean registered in joint names at Land Registry ) . Its difficult to understand how the property can be jointly owned if the wife's name is not shown with husband's name on the property title. I think the tax man has made a mistake

                    https://www.gov.uk/government/public...-and-income-17

                    https://www.samconveyancing.co.uk/ne...nd-income-3932

                    https://www.taxinsider.co.uk/1839-Fo...s_It_Work.html

                    Comment


                      #11
                      I can only assume that the definition of joint owners is not as you presume, and that the deed of trust makes my wife a non-legal owner, or beneficial owner which does not require her name on the property title. I asked this is in very black and white terms to my solicitor (twice!) and there response was very definitive, and in writing, that she does not need to be on the deeds of the house.

                      As discussed above I may have decided to not inform my mortgage lender of a change of circumstances which they may or may not be happy about if they were to ever somehow find out, but in terms of the deed of trust, form 17 and HMRC I have done everything by the book and by the explicit advice of my solicitor.

                      Comment


                        #12
                        Originally posted by Gordon999 View Post
                        The guide issued by hmrc says Form 17 is intended for altering the distribution of rental income for "property jointly owned 50:50 " by husband and wife ( which should mean registered in joint names at Land Registry ) . Its difficult to understand how the property can be jointly owned if the wife's name is not shown with husband's name on the property title. I think the tax man has made a mistake
                        A basic trust for an owner and non owner varies the beneficial ownership and not the title ownership.

                        They're available from a couple of on line conveyancers and seem to have been originally designed to formalise the trust element of beneficial ownership - where someone pays a deposit and isn't on the title deeds, or one partner pays all of the mortgage.
                        This is a new use for them to me, but, at least on the conveyancing web sites, they say they're also valid for this purpose.

                        Tax follows beneficial ownership and, so far, HMRC seem not to have challenged the issue, even though it's not what their tax manuals require.

                        It might be an issue going forward, if HMRC choose to notice that they have form 17 tax payers who aren't joint owners of anything.

                        Originally posted by Doobee View Post
                        As discussed above I may have decided to not inform my mortgage lender of a change of circumstances which they may or may not be happy about if they were to ever somehow find out, but in terms of the deed of trust, form 17 and HMRC I have done everything by the book and by the explicit advice of my solicitor.
                        You can't have that.
                        I did everything by the book apart from the mortgage fraud...

                        Your lender wouldn't be "not happy", they'd probably call in the loan and blacklist you.
                        Google "National Hunter".
                        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


                          #13
                          Interesting post as I'm in same position. I have had a property tax specialist look into this for me and it is more complicated than it seems as you need to consider value of the property when she becomes beneficial owner. In some cases I have been able to allocate income share 99-1% in her favour but the mortgage company does need to know this and in one case required a new application as her income and liabilities needed to be taken into consideration. It's not as simple as just adding her name to the mortgage. As everybody's position is different I'd thoroughly recommend consulting a property tax specialist as a standard conveyancer will not be aware of the complex rules surrounding this.

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