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Joint mortgage on rental property. who is liable for the tax?
samuel.s
Posts: 102 Forumite
My question is i have two small 1 bed apartments which are rented out and generating approx 900 per month total. soon the income from these will become my only income. when i purchased they was purchased with my then wife (now ex)
Can you nominate who has the income from the rent or does HMRC insist on taxing both parties who are named on the mortgage. My ex wife does not want anything to do with them or has ever showed any interest in being a landlord but at the time of purchasing we used her income to help obtain the two mortgages.
Can you nominate who has the income from the rent or does HMRC insist on taxing both parties who are named on the mortgage. My ex wife does not want anything to do with them or has ever showed any interest in being a landlord but at the time of purchasing we used her income to help obtain the two mortgages.
Total debt December 2010 = [STRIKE]£47,365.08[/STRIKE] Total debt January 5th 2011 = [STRIKE]£47,080.89[/STRIKE]
Total debt February 5th [STRIKE]£46,431.12 [/STRIKE] Total debt 5th March 2011 = [STRIKE]£45,865.41 [/STRIKE] Total debt 5th April 2011 = [STRIKE]£45526.29 [/STRIKE]Total debt 5th May 2011 = £44764.56[/STRIKE]Target debt for Dec 2011 = £40,000.00
Total debt February 5th [STRIKE]£46,431.12 [/STRIKE] Total debt 5th March 2011 = [STRIKE]£45,865.41 [/STRIKE] Total debt 5th April 2011 = [STRIKE]£45526.29 [/STRIKE]Total debt 5th May 2011 = £44764.56[/STRIKE]Target debt for Dec 2011 = £40,000.00
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Comments
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Sort out your affairs. Who owns them? Who's name is on the mortgage? Who is GOING to own them post split up? Have you divided you lives/possessions.
If she doesn't want them, get them in your name, on a BTL mortgage in your name, and take full responsibility.0 -
Is it that easy to change them into my name on the BTL mortgage. I am sure she would agree to it but did not realize i would get mortgage approval with no job.Total debt December 2010 = [STRIKE]£47,365.08[/STRIKE] Total debt January 5th 2011 = [STRIKE]£47,080.89[/STRIKE]
Total debt February 5th [STRIKE]£46,431.12 [/STRIKE] Total debt 5th March 2011 = [STRIKE]£45,865.41 [/STRIKE] Total debt 5th April 2011 = [STRIKE]£45526.29 [/STRIKE]Total debt 5th May 2011 = £44764.56[/STRIKE]Target debt for Dec 2011 = £40,000.000 -
You can declare unequal shares of ownership with HMRC. My wife and I own different shares for tax reasons. If you haven't done so then I believe it's 50/50.
Who has been declaring the income and paying tax on it until now?0 -
Is it that easy to change them into my name on the BTL mortgage. I am sure she would agree to it but did not realize i would get mortgage approval with no job.
You'd need to satisfy BTL criteria.
Probobly 25% equity (ie a mortgage of 75% of the property value)
and and a projected rental income of 125% of the mortgage repayments.
Salary is not taken into account on most BTL mortgages.
See an independant mortgage broker.0 -
I doubt there is any equity in the properties now. They was purchased in 2007.I think at the time we had to put down a 15% deposit.
The only good thing about them at the moment is we are enjoying low interest rates which equals a bit of income.
On another note if we mange to transfer ownership to me then come to sell them in a few years and they realize a profit can you nominate shares then for CGT purposes. ie using both mine and wifes personal allowance ( we are seperated but not divorced yet)
Or does the HMRC base the CGT on whose name the mortgage is in.Total debt December 2010 = [STRIKE]£47,365.08[/STRIKE] Total debt January 5th 2011 = [STRIKE]£47,080.89[/STRIKE]
Total debt February 5th [STRIKE]£46,431.12 [/STRIKE] Total debt 5th March 2011 = [STRIKE]£45,865.41 [/STRIKE] Total debt 5th April 2011 = [STRIKE]£45526.29 [/STRIKE]Total debt 5th May 2011 = £44764.56[/STRIKE]Target debt for Dec 2011 = £40,000.000 -
You can declare unequal shares of ownership with HMRC. My wife and I own different shares for tax reasons. If you haven't done so then I believe it's 50/50.
Who has been declaring the income and paying tax on it until now?
You can only declare unequal shares to HMRC if you actually own unequal share as declared to land registry.0 -
Incorrect.
Google for "declaration of trust" and "beneficial interest" with respect to rental income.
I know there are ways to do it. It does not alter the fact that you cannot legally do it by just declaring it to HMRC.From HMRC form 17 ....
You cannot make a declaration:• unless the property and income are actually held by you inwould be to your advantage
unequal shares. You cannot simply choose to have the
income taxed on an unequal basis because you think it"Your declaration must reflect the facts about your share in each property and the income from it. You will be prosecuted if you make a false statement."0 -
That's why I said "we own different shares for tax reasons". When we bought the property it was processed with different shares throughout and we declare those different shares of income. I am concerned that samuel.s seems to think that because his wife is 'not interested' that she's not getting any income as all of his posts seems to talk about Capital Gains Tax and not income tax!0
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