Options to reduced tax liability on BTL
danm
Posts: 541 Forumite
in Cutting tax
Guys,
Want to purchase second property as investment.
I am an additional rate taxpayer
my wife does not work - her total earnings are interest income and are less than the tax free allowance.
Looking at various financing options and pro/cons.
initially i was thinking to get the Property and Finance solely in wifes name - but discussion with broker suggest i cannot raise mortgage. Unlikley that lenders would accept a guarantor on a BTL also.
Joint owners/Joint finance - Easier to underwrite from finance perspective but still leaves 50% of the income in my name with additional liability.
I then did some googling and understand that we can own the property as tenants in common. 99% in Wires name, 1% in my name... How does this work alongside the mortgage payment however as that would be a joint application.
My assumption is that this is all above board. are there any alternate options?
thanks in advance
Want to purchase second property as investment.
I am an additional rate taxpayer
my wife does not work - her total earnings are interest income and are less than the tax free allowance.
Looking at various financing options and pro/cons.
initially i was thinking to get the Property and Finance solely in wifes name - but discussion with broker suggest i cannot raise mortgage. Unlikley that lenders would accept a guarantor on a BTL also.
Joint owners/Joint finance - Easier to underwrite from finance perspective but still leaves 50% of the income in my name with additional liability.
I then did some googling and understand that we can own the property as tenants in common. 99% in Wires name, 1% in my name... How does this work alongside the mortgage payment however as that would be a joint application.
My assumption is that this is all above board. are there any alternate options?
thanks in advance
0
Comments
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If your main concern is reducing the tax then you are presumably charging more intent than your mortgage interest and other costs so the simplest method would no doubt be to make the rent ultra affordable, less income = less tax0
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the main concern is to maximise the return to me and my spouse jointly, while minimising the amount we jointly pay to HMRC.
not sure why anyone would ever charge less rent unless the impact would be to avoid moving into next marginal tax bracket?0 -
I think you can actually hold it as tenants in common with 100% beneficial interest for your wife, not 99%. This will simplify your tax return.
I'm quite surprised your wife can't get a BTL mortgage in her sole name. What LTV are you looking for?
Be aware that government is gunning for BTL. Nobody loves a landlord, so you can expect the tax and regulatory situation to worsen over the years.No reliance should be placed on the above! Absolutely none, do you hear?0 -
Lease the property to your wife for £1 a year. Then she can then let it out as normal0
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the main concern is to maximise the return to me and my spouse jointly, while minimising the amount we jointly pay to HMRC.
not sure why anyone would ever charge less rent unless the impact would be to avoid moving into next marginal tax bracket?
My brother charged his MIL rent equal to his mortgage interest payments, so made no profit.
Why did he do this? She was on housing benefit and I guess his interest payments were about the maximum she could get under the Local Housing Allowance rules so she was not out of pocket.0 -
This is incredibly bad advice.QuickRebates wrote: »Lease the property to your wife for £1 a year. Then she can then let it out as normal0 -
I think you can actually hold it as tenants in common with 100% beneficial interest for your wife, not 99%. This will simplify your tax return.
I'm quite surprised your wife can't get a BTL mortgage in her sole name. What LTV are you looking for?
Be aware that government is gunning for BTL. Nobody loves a landlord, so you can expect the tax and regulatory situation to worsen over the years.
75%
The problem- as I am led to believe is that lenders require some employment/ earnings....even if low, to cover rental voids...0 -
Thanks for pointers here guys. Seem like the tenants in common route is most effective.
Quick question.... Will a Standard conveyancing solicitor be able to set up the appropriate trusts etc or do I need a specialist?0 -
Thanks for pointers here guys. Seem like the tenants in common route is most effective.
Quick question.... Will a Standard conveyancing solicitor be able to set up the appropriate trusts etc or do I need a specialist?
Tenants in Common, 99:1. Standard conveyancing, can be entered on form TR1 at purchase, doesn't even need a trust deed. However you must register with Form 17 to HMRC as well.0
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