Joint or single taxation

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

    Joint or single taxation

    Hello.
    Im new to being a landlord.
    my wife and I have inherited a 2 bed flat.
    we have decided to keep it and let it out.

    my wife has an occupational pension plus state pension so already pays tax at normal rate.
    i retired early to look after my wife who has I’ll health, so no income of any sort.

    im advised rental value of flat is approx 10k pa

    can I designate myself as the “landlord” and declare income in my name only, therefore pay no tax? OR will the rental be deemed as joint income, therefore my wife would be taxed on 50% ?
    the flat is jointly owned.

    look forward to hearing from anyone that has advice.

    thanks

    #2
    There are two types of joint ownership.

    One is a Joint Tenancy, which is usually the default for married couples.
    In that form of ownership, you both own all of the property and, should one of you die, it simply remains the property of the other.

    The other type of joint ownership is Tenants in Common, where you both own a specific share of the property, usually 50:50, which are legally separate, so you could in theory leave your half in a will to someone else (or your spouse).

    In the Joint Tenancy, you would both be deemed to have half the income and expenditure for tax purposes.
    It's not really possible for you to claim to be the landlord and your spouse not to receive any of the income - because that's obviously not the case.
    Tax follows beneficial income, not the cash, so your wife would be considered to benefit from the income and be taxed on it.
    It is theoretically possible to arrange your affairs so your income and your wife's are completely separate, but that is vastly complex and, unless you're both extremely and independently wealthy, not an option.

    In the case of tenants in common, the income and costs are split in line with the proportions of ownership, and you can, in theory, vary the percentage of ownership for tax purposes with a trust arrangement so that, for example, the property was owned 99% by you and 1% by your wife, and the income and tax would be split accordingly.
    There's a specific mechanism to confirm this to HMRC (called form 17), and the arrangement is both legal and quite common.

    That needs a solicitor (technically it doesn't, but it does for most people in real life) and costs some money, so it's not worth it for some people, because the costs outweigh the saved tax.
    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
      Many thanks for the detailed reply.

      i intend to do it right from the word go, so your advice is of great help.

      best regards

      Comment


        #4
        You & Mrs should register the property 50 : 50 under "Tenants in Common" at Land Registry.

        And change the beneficial interest by DOT to 1% (Mrs) : 99 % ( You) and within 60 days, submit Form 17 to Tax Office . This will allow you to claim the rental income.

        Comment

        Latest Activity

        Collapse

        • Reply to Advice
          by SouthernDave
          I started my limited company a year before buying the first property, then bought a second 2 months later, a third 3 months after that, a fourth 5 months after that and so on to where I am now. Our lenders have never said they want a separate company per property. Ive never heard of that, if it were...
          23-01-2022, 17:40 PM
        • Advice
          by jhoggard
          Hi,

          I currently have a property rented out in my own name with a fair bit of equity around 50% LTV this is actually a repayment mortgage which i'm looking to switchover to a interest only. When i do this i'm also taking money out of the property to put towards another which i'm looking...
          20-01-2022, 14:25 PM
        • Reply to Advice
          by jpkeates
          I don't think we disagree.

          The OP has one property and is looking to buy a second.
          At that point in that business, lenders will want a company per property.

          There's a point where that ceases to be the case, when the portfolio gets big enough, or, presumably when someone...
          23-01-2022, 17:34 PM
        • Reply to Advice
          by SouthernDave
          i concur with this, once you get over 4 properties, they consider you to be a portfolio landlord and want to start seeing cashflow forecasts before lending to make sure the company is buoyant. Directors guarantees each time but no limits on number of properties or number of dofferent lenders....
          23-01-2022, 16:50 PM
        • Reply to Advice
          by JamesHopeful
          This is not true in my experience. I currently have eight properties in the same company, across a number of different mainstream BTL lenders, and none of them have batted an eyelid at the number.

          Where I have known lenders worry about the company is it doesn't have the correct SIC code...
          23-01-2022, 16:28 PM
        • Reply to Advice
          by theartfullodger
          Depends to a great degree on tax regulations over the coming years. We only know what the rules are today, not what they'll be in future e.g. when you retire

          I expect chancellors to cut back on the advantages of people owning property through companies (well, wouldn't you if you were chancellor)...
          22-01-2022, 13:06 PM
        • Reply to Advice
          by Gordon999
          1. No. You have not sold the property yet

          2. 19% on profit by company.

          3. Seek advice from accountant.
          22-01-2022, 09:36 AM
        • haring inherited property
          by halfax
          i am inheriting a property and would like to place half in my grandsons name.
          as anyone done similar?...
          19-01-2022, 18:12 PM
        • Reply to haring inherited property
          by halfax
          thanks for help to everyone who replied, great forum
          21-01-2022, 18:55 PM
        • Reply to Looking for tax / financial advice for a BTL /holiday let long-held portfolio
          by ifallelsefails
          I watched a webinar from Landlord studio and this man Tony Gimple was featured in it. Have a look at his Linkedin profile:
          https://www.linkedin.com/in/tonygimp...alSubdomain=uk
          He has a website whereby he consults exactly to your situation:
          https://www.bel.gb.net/
          ...
          21-01-2022, 17:13 PM
        Working...
        X