Joint ownership tax share

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    Joint ownership tax share

    Hi,
    I am looking at purchasing a property with my partner to rent out. My partner works and earns a good salary and I am not currently working. If we get a joint BTL mortgage can we have it as tenants in common so that I own the majority share - in order to pay less tax - as I could then let the property without paying any tax as I would be using my tax allowance. Can this be done even though we are not married?
    Thanks

    #2
    Yes.

    Although being unmarried, both of you could be joint (legal) owners, but you receive 100% of the rental profit - so long as the appropriate Agreement is in place.

    http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm

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      #3
      Thanks for the quick reply. Do you know if I can still be the owner (as in on the mortgage) if I don't have an income? I'm just thinking that the bank may refuse to have me on the mortgage if I don't earn anything?

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        #4
        That's up to the lender.

        If you are not a mortgagor, then you will not be able to claim an interest deduction against the rental income.

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          #5
          Thanks. we are trying to decide whether it would be best to buy a property outright or have a BTL mortgage because of using my tax allowance. We have some money from a property sale (residential) that we are looking at using either for 1 rental property (own outright) or mortgage. My partner is a higher rate tax payer and it seems a shame that I cannot use my tax allowance. I guess I will have to speak to some lenders and see if they will agree to me being on the mortgage. Is it better for tax to own the property outright? As then all rental is income?

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            #6
            If you and your partner are buying a property outright ( without mortgage ) under joint names, you both can decide whether to register as "joint tenants" or as "tenants in common".

            If you register as " tenants in common" , you have to tell your conveyancing solicitor what share of the total cost each joint buyer has contributed ( e.g 50% each or 90% + 10% ).

            The receipt of income from property has to be declared to HMRC by each buyer submitting an annual SA tax return after April 5th.

            The taxable income is based on the profit calculated from the total rent received over 12 months less the allowable expenses ( including agents fees, repairs, loan interest etc ) .

            Each joint buyer normally has to declare the proportion of profit, income and expenses according to the share of ownership as tenants in common.

            However before commencement of letting , joint owners can vary the share distributed by written agreement signed by both parties, and to produce to HMRC if demanded.

            This means if you (A) are not working, the written agreement can say that both joint owners A+B have agreed the rental surplus shall be shared 100% to A and 0% to B and since you can claim the personal allowance , the first 9440 pds will be your tax free income.


            If you decide to buy with a BTL mortgage , you will probably pay 30% deposit and have monthly repayments which consume most of the rental income and leave you little or no surplus income

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              #7
              You won't have a problem with going on the mortgage, so long as your partner is earning above £25k. I don't work, but my husband does and I am on all the mortgages (this applies to both before marriage and since).

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