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 SouthernDave
                                I started my limited company a year before buying the first property, then bought a second 2 months later, a third 3 months after that, a fourth 5 months after that and so on to where I am now. Our lenders have never said they want a separate company per property. Ive never heard of that, if it were...
                                23-01-2022, 17:40 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 Advice
                                by jpkeates
                                I don't think we disagree.

                                The OP has one property and is looking to buy a second.
                                At that point in that business, lenders will want a company per property.

                                There's a point where that ceases to be the case, when the portfolio gets big enough, or, presumably when someone...
                                23-01-2022, 17:34 PM
                              • Reply to Advice
                                by SouthernDave
                                i concur with this, once you get over 4 properties, they consider you to be a portfolio landlord and want to start seeing cashflow forecasts before lending to make sure the company is buoyant. Directors guarantees each time but no limits on number of properties or number of dofferent lenders....
                                23-01-2022, 16:50 PM
                              • Reply to Advice
                                by JamesHopeful
                                This is not true in my experience. I currently have eight properties in the same company, across a number of different mainstream BTL lenders, and none of them have batted an eyelid at the number.

                                Where I have known lenders worry about the company is it doesn't have the correct SIC code...
                                23-01-2022, 16:28 PM
                              • Reply to Advice
                                by theartfullodger
                                Depends to a great degree on tax regulations over the coming years. We only know what the rules are today, not what they'll be in future e.g. when you retire

                                I expect chancellors to cut back on the advantages of people owning property through companies (well, wouldn't you if you were chancellor)...
                                22-01-2022, 13:06 PM
                              • Reply to Advice
                                by Gordon999
                                1. No. You have not sold the property yet

                                2. 19% on profit by company.

                                3. Seek advice from accountant.
                                22-01-2022, 09:36 AM
                              • 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 halfax
                                thanks for help to everyone who replied, great forum
                                21-01-2022, 18:55 PM
                              • Reply to Looking for tax / financial advice for a BTL /holiday let long-held portfolio
                                by ifallelsefails
                                I watched a webinar from Landlord studio and this man Tony Gimple was featured in it. Have a look at his Linkedin profile:
                                https://www.linkedin.com/in/tonygimp...alSubdomain=uk
                                He has a website whereby he consults exactly to your situation:
                                https://www.bel.gb.net/
                                ...
                                21-01-2022, 17:13 PM
                              Working...
                              X