Reducing tax liability question.

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    Reducing tax liability question.

    I'll include all info incase it has a bearing!
    I purchased a house way back in 1989 for 28.5k deposit of 7k so 21.5k mortgage(call this house A) My girlfriend (now my wife since 1998)moved in with me. 5 yrs later I found a house for sale around 1995 for 49.5k but the market was slow at the time and I really wanted this new house(call it house B) so I sold house A to my girlfriend for 21.5k to clear my mortgage leaving me free to move quickly and purchase house B. She rented house A out and continued to live with me. The house next door to house B came up for sale at a decent price as it was a bit rough (ex rental with antisocial tenants in the main). By cashing in everything we had we could buy it...just.
    as we both already owned a property each, my wife house A and myself house B one of us would have been responsible for the ,newish at the time, 2nd property tax, forget it's proper name, at 2 or 3% iirc. I then made enquiries with a solicitor to check it was all legal, and it was, so my wife gifted house A to me so she could buy the house next door (call it house C) without paying this property tax. Everything went through ok and we've now been renting out house C for around 3 yrs or so.
    There are no mortgages on any of the 3 houses.
    We live quite simply and are happy to continue this way but paying less tax would be nice for sure.
    I am early retired late 50's and my only income is the rent from house A at around 7k a year.
    The wife has a part time job of around 9.5k plus the rental income from house C of around 6k.
    I pay no tax because I'm under the taxable limit by a fair margin , think it's 12.5k now?
    The wife has taken 1k of my allowance as is allowed so my tax free allowance is more like 11.5k.
    We are trying to save up for works needed to get the EPC C rating so are looking at ways to help us save more quickly.
    My question (finally!)
    Could my wife 'gift' a percentage of her rental house ownership to me ?, For simplicity, say 50%, would the taxman then accept a 50/50 rent split so I would still pay no tax and the wife would pay less tax?
    Maybe a higher percentage my way would mean we both pay no tax? Thinking aloud really...
    We haven't done or are willing to do anything illegal though.
    Thanks in advance guys/gals.

    #2
    Are you getting 7K from house A and what about house B ?

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      #3
      Yes, 7k from house A.
      house B is our home that we live in with our 2 children.
      So, two rentals, A and C.

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        #4
        Gifts between spouses are tax free and the only costs are the costs of conveyancing.

        You might want to consider gifting each other the properties, so that they are both in joint ownership.
        If you do that as tenants in common, you can use a simple deed of trust to set the percentages exactly as you wish, and you can then change them if your circumstances also change.
        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).

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