Signing half a BTL to my partner (who doesnt work) for tax benefitd

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

    Signing half a BTL to my partner (who doesnt work) for tax benefitd

    Hi all,

    Always great info on this forum

    So I own a BTL, completely in my name.

    My partner (we're not married) doesn't earn (she's a full time mum), and doesn't take advantage of her tax free allowance at all.
    I'm in the 40% tax bracket.

    If I gifted half of the BTL to my partner, we'd then own 50:50 and she'd take half the rental income. Her half would be under £10k a year so tax free, whereas I currently pay 40% on it.
    So it could be a big tax saving.

    What steps/downsides/costs are there in doing this please? The 2yr mortgage term I signed up for has lapsed, so I'm just on the standard variable rate (which is fantastic, so I wouldn't want to lose that ideally)

    Would we be liable to increased capital gains if we sold the place in say 5 years time?

    Can I simply phone my mortgage people and add her name to the mortgage? I assume not....

    Many thanks

    #2
    Can I please respond to the final question you have raised.

    For a lender to agree to allow for the transfer of equity and the mortgage to be converted into joint names they will need to underwrite your partner as she will have a liability in meeting the mortgage payments in the unfortunate event that circumstances preclude you from making the repayment so it is not an automatic Yes. I would suggest that you visit the lender , if they have an office locally, in order that you can explain why you are wanting to transfer a significant percentage of the equity.( I did post a comprehensive response from one of my solicitors following a similar question of transferring equity)

    If approval is granted then there will be a need to engage a solicitor to undertake the processes of the transfer including the registration of your partners involvement on the Title Deeds.

    The next question is the possibility that you will have to pay SDLT if the share to your partner is more than £40000, again your solicitor should advise you what amount you could be liable for and at that point you might want to reconsider your strategy

    I can see the logic of maximising your partners personal tax allowance by transferring a significant share but in my honest opinion the negatives might outrun the benefits, but before you reach for the scotch, speak with your lender and certainly the solicitor.

    Comment


      #3
      You really need to work out what all the pro's and cons are.

      If the current mortgage is more than £80,000 and your partner already owns or is named on the deeds of another property, the gifting of half of the mortgage value will attract stamp duty at 3% above the normal rates.

      Comment


        #4
        Marry your partner and make an honest woman of her, then pay your taxes honestly. Tax evasion is not the way to go.

        Comment


          #5
          Originally posted by calm-on-the-surface View Post
          Marry your partner and make an honest woman of her, then pay your taxes honestly. Tax evasion is not the way to go.
          Who said anything about tax evasion? I'm asking about minimising my tax legally. Funny.

          Thanks all for the info

          She does own half our main house, and the mortgage remaining on the BTL is over £80k, so she'd be liable for 3% stamp duty which would be around£2.5k..... I hadn't thought of that.

          Sounds like it's not worth doing. We may as well buy another BTL together and benefit that way. She's already considering becoming my letting agent as she's already doing most of the leg work, which will have its benefits.

          Many thanks

          Comment


            #6
            an option is for you to hire her as a manager for the property or pay her some compensation for time spent monitoring or maintaing the proeprty. Of course this is open to abuse and HMRC do keep an eye on these. You would have to do it fairly - ie according to market value of what she actually puts in.

            In that way, her "costs" are tax deductable to you as well as utilises her tax position.

            Comment


              #7
              many thanks

              yes we've been discussing this as she does a lot of it anyway, so might as well do the lot and I pay her (just a in a separate thread a few posts down)

              Comment


                #8
                Why do you want to give away half your property, for free, for no payment ?

                Lets assume you paid £ 100,000 for the BTL. So why give someone £ 50,000 -- for nothing ?

                If you ever split up, and 30/40% of couples do, she can make to sell the BTL and give her half the sale price.
                Not a situation I would entertain.

                Comment


                  #9
                  Ahh we're happy you see

                  Comment


                    #10
                    Originally posted by bhodgkiss View Post
                    Ahh, we're happy, you see
                    Not married, not earning, wants half your property on top of the half she already has.

                    No, don't go there.

                    Comment


                      #11
                      I go along with Ram , seems the old sayings may be apt in this instance Love is blind and there's no fool like an old fool. Keep your hard earned assets to yourself for protection for the future.

                      Comment


                        #12
                        Sorry we are changing the subject, but we try to help.
                        Some of us "care", and future capital is all our aims, saving money, as well as helping landlord and tenants.

                        Think on this for the future.
                        Partner or wife is given for free, half your main house and BTL.
                        You separate ( it happens all the time even in the most loving relationships.)
                        You to have to give, in cash, half the price of the main house to the wife, but wife insists she must continue to have what you gave her, and has been accustomed to in the relationship.

                        This means therefore must live in your house, and you can't. She may well secure your house to live in, via the courts, as she has children to house, and no job, and it has happened !
                        You have to continue to pay the mortgage, cannot sell the house to give her half the money, cannot live there, so you have to find the money.

                        She will also have claim to half the BTL, and you will have to sell it to give her half, or find more cash.
                        The bottom line is you end up with nothing.
                        No BTL and no home, sleeping under a bridge and paying mortgage and child support.

                        The above consideration is more important than your original question.

                        Comment


                          #13
                          Well, I appreciate your input. So many thanks

                          Comment


                            #14
                            Originally posted by bhodgkiss View Post
                            Who said anything about tax evasion? I'm asking about minimising my tax legally. Funny.

                            Thanks all for the info

                            She does own half our main house, and the mortgage remaining on the BTL is over £80k, so she'd be liable for 3% stamp duty which would be around£2.5k..... I hadn't thought of that.

                            Sounds like it's not worth doing. We may as well buy another BTL together and benefit that way. She's already considering becoming my letting agent as she's already doing most of the leg work, which will have its benefits.

                            Many thanks
                            Setting out to minimise tax liability by doing something that serves no other purpose except to pay less tax is avoidance and/or evasion. It is not fair nor right, despite what the neoliberals may say.

                            Comment


                              #15
                              There's a big difference between tax avoidance and tax evasion.
                              One's illegal and one is legal for a start.

                              If you run a business with shareholders who want maximum profits and dividends, you have a duty to maximise profits and dividends, which means paying the least tax possible.
                              Amazon and Google pretty much told parliament as much when they were asked to explain their tax evasion policies.

                              There's no reason a self employed person should pay a penny more tax than they should.
                              As a citizen, you should make sure you don't pay any less than you should either.

                              Anyone who thinks that it's somehow wrong to minimise the tax they pay can simply help out by ignoring their personal tax free income tax allowance, and not claiming business expenses as allowance against tax.
                              That way they can avoid any guilt they feel using legitimate measures to make sure the tax they pay is correct.
                              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

                              Latest Activity

                              Collapse

                              • Reply to Advice
                                by jpkeates
                                1 - Yes, the company will have to buy the property and you will be selling it. So there's a CGT "event" for you and the business will pay SDLT. You need to think about structure if you're going to borrow to grow, most lenders will want one company per property and director's personal guarantees....
                                20-01-2022, 16:02 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 Recovering CGT on sale of property
                                by MadLL
                                Thank you for your responses. Does anyone have any thought on these EIS schemes, are they as safe as an investment in a rental property?. at least with a rental property you (hopefully) get rent every month and also capital growth - any thoughts?

                                thanks
                                20-01-2022, 15:31 PM
                              • Offsetting taxable profits with Pension contributions
                                by Bristol_newbie
                                Apologies if this has previously been posted, I have searched but can't find much.

                                I have recently moved in with my partner and subsequently started renting out my house. I have been lucky enough to make a 5 figure pre-tax profit (most of which will be sunk into paying off my rather high...
                                20-01-2022, 09:32 AM
                              • Reply to Offsetting taxable profits with Pension contributions
                                by OneSmallStep
                                Hi,
                                Whilst you can't offset the income from your rental, you can easily contribute from your salaried earnings.

                                So if your property profit is £12500 pre tax. Then make the same contribution through PAYE to your pension. It is just a case of moving money. If your only source of income...
                                20-01-2022, 12:35 PM
                              • Expense claim - Name and address in the receipt
                                by geeksy
                                Hi,

                                I need to claim an expense (£1500) for the bathroom and attic renovation work done in the property I let. I have two receipts for the same purchase, one originally issued and the second subsequently issued with additional two items.

                                One of these has my address on it, not...
                                20-01-2022, 11:39 AM
                              • Reply to Expense claim - Name and address in the receipt
                                by jpkeates
                                The chances of HMRC investigating the claim are very small, and I'd keep both receipts just in case.
                                20-01-2022, 12:07 PM
                              • 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 royw
                                You can put his half in a bare trust. Do consider the possible consequences though. Your grandson won't be eligible for first time buyer incentives and will have to pay additional stamp duty if he buys his own home.
                                20-01-2022, 11:27 AM
                              • Reply to haring inherited property
                                by Lawcruncher
                                Section 1(6) Law of Property Act 1925:

                                A legal estate is not capable of subsisting or of being created in an undivided share in land or of being held by an infant

                                "Infant" outdated term for "minor"....
                                20-01-2022, 10:30 AM
                              Working...
                              X