Deed of Trust for rental income

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    Deed of Trust for rental income

    Hi I purchased a property in 1990 for cash in my sole name for £30000. My wife myself and the children have lived there until 2010 when we shifted into another property. I then let the property and continue to do so. I work for a company for approx. salary of £36000/year and receive £8800/year rental income. I am considering putting the property in both names thro land registry and then make a deed of trust 100% -0% in favour of my wife receiving full rental income because she is a part time worker hence she pays no tax.
    What are the pitfalls of doing this?
    When we ever come to sell the property can we revert the deed of trust back to 50-50 and both get capital gains allowance?
    When we sell will we both be able to claim Private residence relief and Private letting relief or just me because the house was in my name when we were living there?
    Is there anything else we should be doing to minimise the tax that is being paid on this property?

    #2
    What is the capital gain if you sell now ?

    You have owned the property for 25 years and lived in it for 20 years so you would have to pay capital gains on the gain for last 3.5 years . You can claim exemption for PPR and Lettings relief. So probably no tax to pay.

    if you transfer 50% to wife , then in the event of sale , you may find that she cannot claim PPR or lettings relief on her half share of the capital gain. So you should seek advice from an accountant.

    Comment


      #3
      You can only claim PPR and Letting Relief if you were a legal owner when you lived there. If you sold it in the next couple of years then probably no CGT but I would need the numbers and dates.
      If you did the transfer then there would be a CGT liability.
      You receive £8800/year rental income but how much profit do you have to declare. Regards Peter

      Comment

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      • 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
      • 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 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
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        Hi all,

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