Buying house as investment

pennywatch

My husband and I are thinking of buying property as an investment for the future. He currently works I do not. If we let it out, the rent could potentially put us in the higher tax bracket. If the property was bought in my sole name would this make any difference?

Any thoughts recommendations would be appreciated.

nomoneytoday

Would the mortgage company lend you the money as you're not working?

angrypirate

For starters, when you let out a property its a business not an investment. You dont just sit on it and hope to cash in one day. Are you ready for the midnight phone call when the central heating breaks down? An investment wont call you up in the middle of the night

But otherwise, it would probably make more sense to have it in your name and for you to be the landlord to minimise your tax bill

GDB2222

nomoneytoday wrote: »

Would the mortgage company lend you the money as you're not working?

BTL mortgages tend to depend on the rental income, so yes. There'd need to be a sizeable deposit.

brit1234

If you are going to buy wait a few years for property prices to fall more. Then you will get more capital gains and a higher percentage rent after mortgage.

You buy now you might loose a fair bit of money, check out other better investments in the mean time.

pennywatch

Thanks for taking the time to post - but just to clarify - if I am the sole named person on the deeds exactly what impact will that have in relation to tax if we let the property out?

GDB2222

pennywatch wrote: »

Thanks for taking the time to post - but just to clarify - if I am the sole named person on the deeds exactly what impact will that have in relation to tax if we let the property out?

You'll be the one taxed on any income.

00ec25

pennywatch wrote: »

My husband and I are thinking of buying property as an investment for the future. He currently works I do not. If we let it out, the rent could potentially put us in the higher tax bracket. If the property was bought in my sole name would this make any difference?

Any thoughts recommendations would be appreciated.

for married owners the tax rukes are rigid

if jointly owned the rental income is split 50/50 and tax is due from each person at whatever their individual tax rate is

if owned as tenants in common the rental income is split exactly in accordance with the ownership split and tax is payable by each person on that share

if only one person owns it , then only one person pays tax on it

pennywatch

Thanks - thought that but wasn't sure.

jimjames

00ec25 wrote: »

for married owners the tax rukes are rigid

if jointly owned the rental income is split 50/50 and tax is due from each person at whatever their individual tax rate is

if owned as tenants in common the rental income is split exactly in accordance with the ownership split and tax is payable by each person on that share

if only one person owns it , then only one person pays tax on it

We are in the process of buying BTL and are married. The property cannot be in my wife's sole name as her income is insufficient. My understanding was that we can own as tenants in common and have unequal shares which would be beneficial tax wise.

Is this correct even if you are married? Are there any rules on how the unequal shares are allocated?

00ec25

jimjames wrote: »

We are in the process of buying BTL and are married. The property cannot be in my wife's sole name as her income is insufficient. My understanding was that we can own as tenants in common and have unequal shares which would be beneficial tax wise.

Is this correct even if you are married? Are there any rules on how the unequal shares are allocated?

correct,
It is tax efficient to use TIC if one of you is in a different tax bracket to the other, in which case obviously the lowest rate tax payer should hold the larger share (the actual split is for you to agree, there is no rule on how you decide it between you, eg could be 99% & 1%.)
HMRC assumes the default position for any married couple is joint (50/50) ownership, so for a TIC, you must make a formal declaration on form 17 here to claim your unequal basis for your tax return

Please note: "a declaration is only valid if their interests in the income and in the property itself correspond" - see section on jointly owned property - husband & wife - it's the final section at the bottom of this . ie you cannot own it 60/40 and claim the income is split 99/1

Clearly therefore using TIC has its downsides, eg. it will set in stone that one of you will own a larger share than the other .... divorce and trying to deal with different sized initial deposit contributions etc etc


BTW "her income is insufficient" is confusing - a true BTL mortgage is done with ref to a minimum amount of deposit and then a rental income multiple, it should not be based on a personal income multiple.
Are you trying to buy the property with a normal residential mortgage? Have you confirmed that will be allowed?