Rental income and personal allowances

d_pt

Hi newbie here looking for advice,

I own a property with my long term partner and we have a mortagage on it. We are shortly relocating as part of my work and plan on renting the property. My partner doesn't work and she has no income.

To minimise the tax I thought it best she be the landlord and then from any profit she could offset her personal allowances - Q. is this the case that PA's can be used against rental profit?

Also the mortgage is in joint names so can she claim all the interest on the mortagage or just half of it for the purposes of allowable expenses.

Thanks David

G_M

Who owns the property? I'd guess since the mortgage is in both names that you jointly own?

So you are joint landlords! You could, of course, transfer ownership into your partner's sole name but you'd need the lender's permission. And since she doesn't work.....

I assume you will be getting the lender's permission to let the property.

Re tax, see the gov site here.

d_pt

We both own the property so does that mean half of the profit is hers and half mine - ideally I was trying to get the profit over to her

G_M

davidpout wrote: »

We both own the property so does that mean half of the profit is hers and half mine - ideally I was trying to get the profit over to her as I am a 50% tax payer

Please see my answer above!

ps - as a 50% tax payer you are a relatively wealthy individual. Stop trying to avoid tax on income you will earn!

d_pt

I see I can use personal allowances but half of the profit is going to have to be mine on which I will pay tax, doesn't look as renting is going to be too sensible.

Thanks for link.

Anyone think of a way round the problem of me getting half the profit?

mackemdave

If you want to use up your partners tax allowances send her out to work for a living....:j:j:j

d_pt

That will be the answer then:T
She has worked for 35 years and I thought might be nice for her to take a break!

tbs624

Before dismissing the idea, have a thorough read of HMRC's Property Income Manual so that you understand the full allowances you can set down against your rental income. You are likely to find that you would have little tax to pay initially, unless your mortgage is a very small one and the property is in a high demand area and can command a an above average rent.

jockosjungle

If there is a mortgage on it I strongly doubt you will be looking at massive taxable profits, if you're looking to rent it out for more than the mortgage then what is the problem, its not like you can be taxed higher than the money you'd make

R

Yaxley

Reading HMRC leaflet about rental income on jointly owned second house, for rental, says if you and spouse live together, usually treated as if it the property belongs to both in equal shares.. even if it is owned in unequal shares.. but you can apply for income to be treated on same basis as ownership... Does anyone know what happens on selling such a joint asset .. does each owner have full CGT allowance ????

Yaxley

Reading HMRC leaflet about rental income on jointly owned second house, for rental, says if you and spouse live together, usually treated as if it the property belongs to both in equal shares.. even if it is owned in unequal shares.. but you can apply for income to be treated on same basis as ownership... Does anyone know what happens on selling such a joint asset .. does each owner have full CGT allowance ????