Help pls newbie landlord-FORM 17 tax return & query PLS

500pages wrote: »

a) How does SDLT liability get calculated - for example, in our case, we've got a 120k mortgage outstanding on the place - I believe there is SDLT on the transfer of equity when it is subject to a mortgage, but that only kicks in above 125k and since we'd be transferring about 110k of it, notionally, it wouldn't be subject to it... ? (as a side note, we'd be transferring about £60k of cash equity in the process, too).

SDLT liability does not take account of the beneficial interest share, that is because it remains on the basis that you are still jointly and severally liable for the whole mortgage itself, so it remains at the 50/50 split implicit to that liability.

In your case she is already liable for the mortgage since she is already a joint owner and on the mortgage to start with. So there is no change, she is already liable for 60k of the 120k mortgage debt and therefore nothing has changed. There is no chargeable consideration given and thus nothing to apply SDLT to since her mortgage liability has not altered, even though the beneficial ownership has

b) Is the amount of the mortgage payment due from each of the tenants in common related to the % ownership - eg. if the mortgage payment is £300pcm, and I own 10%, should I be notionally paying £30pcm, and then able to offset that figure (or 75% this year, 50% next and 25% the year after as per the tax changes) against the income that I receive from the property (which I am assuming would be 10%...)

all income AND ALL COSTS must be split exactly as per your beneficial ownership. Failure to do that will have severe implications if your tax returns are inspected. As stated by dazed and confused it is not the mortgage "payment", it is only the mortgage interest which is the allowable cost (although if this is a BTL mortgage it is presumably an interest only mortgage and so the "payment" is the same as the "cost" in reality?)


c) I don't really fancy the idea of paying a solicitor or an accountant £250+ to draw up the Deed of Trust because I have seen such documents and they are fairly straightforward. I do understand that there is a risk that if we were to separate later on, there are implications that we may not have addressed in the deed; and we believe we would be mature enough to deal with such things in a fair and transparent manner - many people will roll their eyes and say that they've heard it before and that you should always seek the advice of a professional. And it may well be stupid naivety on our part if we don't seek the advice of a professional in drawing up said Deed. However, I would really really like to know what the risks actually are of drawing up such a document without engaging a professional - does anyone have any views on this? For example, are there actually things that could go wrong in terms of tax stuff.. (if you rolled your eyes earlier, feel free to roll them again)
doubtless there are scenarios which you you won't have thought of, but in principle i too consider that a deed can be a straightforward document to write. Of course if done as a deed rather than a declaration it needs to be witnessed...