Transfer of rental income/ownership to spouse

  • Filter
  • Time
  • Show
Clear All
new posts

    Transfer of rental income/ownership to spouse

    Hi all,

    Have seen several threads closely related to my issue, but small differences seem to make a significant impact on the situation wrt HMRC
    Am a damn good engineer but a layman in matters of tax and conveyancing so please be gentle...... The situation is as follows:

    I bought a house in 2000 for £160k, it was my residence with mortgage in my name only. In 2002 my girlfriend moved in. We married in 2004 and continued to live in the house until 2007, when we moved and rented it out. The mortgage was moved to a BTL interest-only, but still in my sole name. At the time this worked as the initial fixed mortgage rate was relatively high. I am a 40% tax payer so after rental expenses tax liability was negligible. Based on property for sale in the village I would estimate the current value at £220-230k.

    When the fixed rate expired the mortage moved to a BBR tracker. Interest payments dropped significantly so there is currently a profit of £7000pa. With the current arrangement I am looking at a bill of around £3000 after expenses. The tracker rate is much better than anything I could get re-mortgaging so would prefer not to change if possible.

    The mortgage on our residence is in joint names. My wife also has a property that she lived in before we met. That is rented and the small mortgage is in her name only. It does not generate a profit. She is a housewife and not currently working.

    I'd like to know what options (if any) we have to move some rental income to my wife. Also the general implications of those options. From other posts I believe that if we use interspousal transfer then this could jeopardize my PPR/lettings relief. If we change the ownership there are potential SDLT implications.

    Clearly I will need a solicitor but would prefer to understand options before getting to that stage.

    Thanks in advance.

    Will you ever want to sell the property? You could currently sell it CGT free, and will be able to for several years to come at least.

    If you transfer it to your wife, and then sell, CGT would be due on eventual sale owing to the loss of your PPR and letting relief (the latter offsetting up to 40k of gain (subject to conditions, but certainly until 2020 for you) ).

    If your wife's house doesn't make a profit even with a small mortgage, you should sell it (commercial advice; presumably her heart rules her head.)

    You could transfer a proportion of the house to your wife. If it is mortgaged, and you transfer a share with more than 125k of mortgage attached, then SDLT would be due. When it eventually comes to be sold she could transfer it back to you and you would be able to benefit from the PPR relief. However, this feels a bit circular; you would want to convince yourself with paid advice from somebody who understands this sort of thing that HMRC could not ignore the final transfer back to you. I think there would always be a risk, but the risk is probably quite small.


      Many thanks Telometer, some interesting info I didn't appreciate there....

      I think my wife is planning on keeping the house long-term for capital gain so lack of annual profit is not really an issue for her as long as it does not cost her. It was her main residence for 3 years before she moved in with me.

      So SDLT would only be due on the proportion of the house with mortgage above £125k, not the total value of the house? That would mean that I could potentially transfer up to 70% to my wife. Would that kind of transfer require notification to the mortgage company (i.e. needing to have joint names)? If so I suspect they may not be too cooperative due to the now favourable term tracker rate.

      Final question, would I need to look for a tax advisor/accountant specialising in property/estate to confirm the mechanism (and likely risk with a transfer back at a later date) and then a solicitor for the paperwork? Am in Lincolnshire and wouldn't know where to start with that as it seems outside the usual area of expertise for most general solicitors or accountants.


        If the Transfer adds W's name onto the legal title, you'll almost certainly need consent from the mortgagee.
        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
        2. Telephone advice: see
        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
        4. *- Contact info: click on my name (blue-highlight link).


          Should be possible just to transfer the beneficial ownership without the legal ownership, and then the mortgagee might not need to be informed. Your solicitor will advise.

          For the advice, go to a decent sized firm of solicitors where one of the partners is a tax specialist. Make sure you ask what the fees will be.

          Lincolnshire is full of wealthy landowners, try


            Sorry for the delay. Thanks very much for the advice. Am talking to someone next week and will post back with the result.


              Missing Something?

              Originally posted by largeyorkshireman View Post
              Sorry for the delay. Thanks very much for the advice. Am talking to someone next week and will post back with the result.
              Why not do the simple thing and employ your wife to manage the property for you? Clearly you would have to pay her (meaning no profit) and she would have to declare the earned income (at her lower tax rate).


                What you're missing is that this thread is nearly two years old.


                Latest Activity


                • Damaged artwork expense
                  by jtufty
                  Hi all

                  Silly minor question really. Last week the tenant accidentally knocked a framed picture off the wall and smashed it. It was only a cheap thing (I guess value was £10). I went out and bought a replacement picture for her. (I know I didnt have to, but shes a good tenant). I bought...
                  24-09-2021, 10:35 AM
                • Reply to Damaged artwork expense
                  by ram

                  As per above, as the place is "part-furnished", which will not incude pictures on walls.

                  It's a gift to a stranger. ( They are not family, not close friends - etc. ) and not a claimable expence in any way..
                  25-09-2021, 16:05 PM
                • Reply to Damaged artwork expense
                  by nukecad
                  I'd see this as an altruistic gift to your tenant and leave it at that.

                  My previous LL (although he had his faults) used to buy the 3 of us in his small HMO a £20 case of beer each at Christmas, I doubt he tried to claim it off tax.
                  25-09-2021, 15:46 PM
                • Reply to Damaged artwork expense
                  by jtufty
                  Its let "part-furnished". (she didnt have a bed, so I put a bed in there, and the white goods, and the [now-broken] picture and a few other bits n bobs)...
                  25-09-2021, 15:13 PM
                • Reply to Damaged artwork expense
                  by Section20z
                  You don't need to write anything. Retain the receipt and just include the appropriate amount in youR expenses/capital totals...
                  25-09-2021, 13:57 PM
                • Reply to Damaged artwork expense
                  by ram

                  We assume the place is let as furnished ?

                  I don't think pictures are classed as furniture / but then again, a mirror screwed to the wall - if broken by the tenant, then the tenant pays.
                  So pictures ? not sure.
                  I would charge the tenant the cost of replacement.
                  25-09-2021, 11:43 AM
                • Reply to Damaged artwork expense
                  by jtufty
                  Thanks guys. I dont know what came over me! A momentary wave of altruism. Most unlike me!

                  I have the receipt. What should I log it as? Should I literally just write "capital expense" or should I be more specific such as "replacement of broken picture"?
                  25-09-2021, 06:45 AM
                • Reply to Damaged artwork expense
                  by jpkeates
                  It's a replacement item of furniture and its allowable as such.
                  There's an inevitable element of betterment when you replace one thing with another.

                  And £40 is neither here nor there as a capital item.
                  24-09-2021, 13:16 PM
                • Reply to Damaged artwork expense
                  by Section20z
                  That sounds definitely like an improvement as you didn't have to splash out £50 you crazy dude.
                  £10 down to repairs and £40 capital expense I reckon.
                  24-09-2021, 11:59 AM
                • Reply to Let Property Campaign.
                  by armour
                  No Neelix, I don't approve of tax evasion.

                  As it happens, I am the friend who has convinced the lady that it was best all round if she made a clean breast of it and fessed up as soon as possible via the Let Property Campaign and am using such talants as I posess to help her to do so....
                  23-09-2021, 07:46 AM