Tax implications on renting property

nazjon

Hi,

I am looking to rent my house out as it is struggling to sell at the moment and I need to move due to expanding family (I am getting consent to let). I am going to rent myself for the time being.

The question is can I pay the rental income into my partners account so it is income for her and not me (although I own the property) so she gets taxed on it? She is not working at moment but will return 2 a low wage P/T job after maternity. I was going to set up the mortgage payments from her account and she would have the taxable surplus (when rent is paid in and mortgage paid out). I wouldnt see any of it but she will have around £350 a month after mortgage is paid and she would get taxed on this.

I fear that if I did it through mine I would go over the 43k mark and lose our child benefits which we really need so I see it as just as legal way around this. If I am wrong someone please tell me!!

Also if I was to change the mortgage to an offset interest only where I paid of capital in different amounts each month, I take it I would have to work out the rental income over the year against the interest paid and capital paid off to work out the profit from it?

Thanks

00ec25

its not that simple

your option depends entirely on whether you are legally married to your partner and whether she is an existing co-owner. You imply that it is in your name only in which case you cannot class it as her income - the key principle for tax is the the rent income flows down to the actual owner not just who ever's bank account receives it.

You can own a property but with unequal shares if you originally went in as tenants in common with specified shares or, if legally married, you can change a joint (ie 50/50) ownership to what you want it to be (eg 99% 1%) or you can give a share to the wife if it started out in single ownership.

all of these have potentially savage repercussions, eg:
- put it in her name and you lose part of your private residence relief if she has never lived in it
- if not married then she now gets a legal claim to it as she is now an owner


BTW
you cannot claim the capital repayments as a cost in your profit calculation, only the interest payable on the mortgage