property joint-ownership and treatment of rental income

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    property joint-ownership and treatment of rental income

    Can anyone give me some general advice regarding joint-ownership of rental property and the treatment of rental income.

    My wife and I are considering buying a property for rental purposes. For the purposes of CGT (when we ultimately sell) it would be more cost-effective for us to own the property jointly but as I am a higher-rate tax-payer it would be more cost-effective if my wife acts as the landlord and receives all of the rental income in her name.

    Can anyone confirm whether or not the rental income from the property can be declared as being all my wife's income even though we would be joint-owners.

    #2
    Why not register the property in you wife's name only? When the time come to sell transfer the property into joint names. Asset transfers between husband and wife are CGT free.

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      #3
      Thanks for that response Paul - 2 further questions as a result...

      1 - Would the Inland Revenue get a bit twitchy about that? Might they take the view that the transfer was done purely as a means of avoiding CGT?

      2 - Presumably I would not be able to claim any taper relief on my share of the gain as I would not have owned my share of the property for any length of time (although my wife would have).

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        #4
        Originally posted by barry99 View Post
        Thanks for that response Paul - 2 further questions as a result...

        1 - Would the Inland Revenue get a bit twitchy about that? Might they take the view that the transfer was done purely as a means of avoiding CGT?

        2 - Presumably I would not be able to claim any taper relief on my share of the gain as I would not have owned my share of the property for any length of time (although my wife would have).
        No need for HM Revenue & Customs to get twitchy, surely.
        Tax avoidance is perfectly lawful; tax evasion isn't.
        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 http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
        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).

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          #5
          Consider buying in joint names as ''Tenants in common''. Keep 1% in your name and 99% in your wife's name. The ownership shares are dealt with by way of a Trust Deed which is an internal document unconnected with the Title Deeds and the Mortgage Deed.

          This will assist considerable when you wish to change the ownership back to 50/50 in due course.

          If you share in 1% and 99%, ie unequal, you will need to notify this fact to Tax Office on a special form, otherwise they will deem the income as shared equally.

          Ramnik
          Private advice is available for a fee by sending a private message.

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