So i read this.....

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    So i read this.....

    http://www.property-tax-portal.co.uk...stion249.shtml

    Is this correct please?

    I own 2 BTLs solely in my name, but with mortgages. My partner (not married) is now a full time mum, and is not using her tax free allowance at all.

    Can I literally sign over 1% of each property to her, then we draw up the paperwork for her to receive 99% of the rental income for tax savings?

    1% of each property is like £2.5k per property, so she doesn't pay any stamp duty or anything?

    Is that too easy? Maybe im missing something here!

    Any help appreciated

    Many thanks

    #2
    Your mortgage lender won't allow that, so its probably a bit academic.
    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


      #3
      many thanks, so this is if the mortgage is paid off.

      Comment


        #4
        Or your partner is on the mortgage (or the lender does agree).

        The tax part works, changing the ownership is all the lender will bother about.
        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


          #5
          Ok so it's actually worth asking the lender?

          Comment


            #6
            Can't do any harm - as long as you don't then do something they've said you can't.
            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


              #7
              Coming back to this....

              Its still not clear to me what is/isn't possible.
              Nothing has changed in my original post above (circumstances the same)

              What scenario makes it possible please? I don't understand the process of how I'd go about it.

              For example

              - I phone lender and they say yes, that's fine, your partner can own say 5%
              - I assume that means we have to take out a new joint mortgage?
              - The 5% is less than £40k, so my partner pays no SDLT
              - Somehow the land registry has to be updated to say we both own? (Where is it recorded that I own a certain % and she owns the rest please?)
              - Question: At any % ownership split, can we draw up a tenants in common agreement so she can have 95% of income for example? or does it need to be 50:50 ownership?
              - Question: does she pay any CGT if the 'gifted' value is small? (below a certain threshold)
              - Question: if we do need 50:50 ownership for tenants in common agreement to be drawn up, can I donate say 10% a year for 5 years, if it means we stay under various thresholds?

              Please clear this up for me

              Many thanks

              Comment


                #8
                I would say "take legal advice", as you need to be certain what happens should your relationship fail (do you want your ex getting all the income whist you have all the expense?).

                Plan for the worst; hope for the best.

                Comment


                  #9
                  Many thanks
                  Lets ignore that for now, as yes I know those implications

                  Comment


                    #10
                    Your lender will probably say no, unless your partner is on a joint mortgage.
                    They'll also possibly prefer the tenancy is joint, rather than in common and might insist.
                    But you'll have to ask (and it's possible that they'll say no to your partner being on the mortgage as she's not employed).

                    You won't be able to split the property percentage one way and the income another without some pretty clever accounting (if you live together you'll be receiving the benefit of your partners income indirectly and the tax follows the benefit, not the paperwork).

                    You can migrate the property over time, to keep the amounts below tax thresholds, but that's a lot of conveyancing - so the costs and benefits need a bit of working through.

                    What you need is a chat with a family solicitor or accountant - it might be better to put things into a trust, which can have it's own tax arrangements, and means the property ownership doesn't change on the title (but the lender will still have to agree).
                    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


                      #11
                      Many thanks
                      My partner is on our joint mortgage on our main residence, for info
                      I'll ask my lender tomorrow!

                      But to confirm, if my lender did agree, we'd then take out a new joint mortgage and define the ownership split within that?
                      And then deal with any CGT and SDLT implications

                      Comment


                        #12
                        The mortgage doesn't define the ownership split - either the title does (as tenants in common if your lender will allow that) or a trust (or some other legal framework) does.

                        You need professional advice first, lenders don't like changes in ownership during loans.
                        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


                          #13
                          Many thanks
                          So one thing I don't think has been answered - does my partner need to own 50% to allow a tenants in common agreement to be accepted for her to get 95% of the income, for example?
                          Or can she own just 10% for example, and this still allows the tenants in common agreement for her to get 95%?

                          Obviously if I can hand over a small enough % to stay below CGT and SDLT thresholds (for her), whilst getting her most of the income, that's the ideal situation tax-wise

                          Comment


                            #14
                            Unless you can somehow get HMRC to acccept that the split is legitimate, the ownership and income split should be the same - so what you're proposing is probably impossible.


                            Technically, tax follows beneficial ownership, not title, but you probably don't want to confirm that your partner owns 95% of the beneficial ownership of your property (and your lender shouldn't allow that either).
                            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


                              #15
                              Many thanks

                              Ah I read this an now I get it:

                              Normally, HM Revenue & Customs (HMRC) treats income from a property that is owned jointly by a married couple or civil partners as if it belongs to each spouse or civil partner in equal shares. So each spouse or partner is taxed on half the income even if the property is owned in unequal shares.

                              The “Declaration of beneficial interests in joint property”, which is HMRC form 17, lets you tell your tax office that you want to be taxed on your actual shares of the income rather than on a 50:50 basis.

                              Form 17 says that you can use it only if you are a married couple or civil partners who live together, hold the property jointly in unequal shares and are entitled to an income split along the same lines.


                              So that answers it, we'd need to be married and she'd need to own 95%
                              For now we can be joint tenants, own 50% each and she'd get half the income, but my partner would have CGT and SDLT implications

                              Comment

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