Tenants in Common

jimjames

Has anyone bought a property as Tenants in Common but with ownership in differing proportions ie not 50:50?

My wife and I are in the process of purchasing a Buy to Let in addition to our current house. My aim was that we could define the interest in the property via Tenants in Common with a trust deed so that the basic rate taxpayer (who pays the mortgage) has the majority share and the high rate taxpayer has the lower share.

With 30% joint deposit and 70% mortgage, I'd calculated it would work out at 85% ownership to the basic rate taxpayer (15% + 70%) and 15% (purely half deposit) to the high rate taxpayer.

Are there any HMRC rules for the division of investment property in this way? It would seem to tie in with the payments being made by each party as all the mortgage is paid by the person with the 85% share.

Has anyone else been in a similar situation? Any issues with it?

holly_hobby

Hi

Yes this is possible, for married couples or those in a civil partnership, who jointly own the property.

Ordinarilly, even if held as tenants in common, unless an election is made to HMRC, all taxable income is equally split i.e 50/50 - you may make an election to have this ratio amended in accordance with your noted % ownership, you need to complete HMRC form 17 (attached for ease).

Once you have elected for an unequal split, this election is not reversible, unless the ownership changes.

Hope this helps

H

HMRC FORM 17 LINK - http://www.hmrc.gov.uk/forms/form17.pdf

BritRael

Yes. Did it 75/25 with my OH (we're not married) through our solicitor.

jimjames

Thanks for your help and the HMRC link. I'll get on to that.

seven-day-weekend

Is it possible for a three-way split (my husband and I and our son) in equal shares?

seven-day-weekend

Sorry, I didn't read the thread correctly, we are not after a buy-to-let, it will be a flat jointly owned by us and our son where our son would live. We will pay the 50% deposit and the rest will be on a mortgage which our son will pay.

Is it possible to own a house three ways like this?

holly_hobby

Yes its possible to own a house (mortgaged with a max of 4 parties). If a me is required - normally only the 2 highest salaries will be used in mulitple calculations or you may from memory also manage 2 x highest & 1 of the remainder.

As you will be part owners on the mge deeds , you shall also need to be party to any mge application process (even if your income is not reqd).

There is one lender who will let different parties be on the deeds than to the mge itself - I think it may be Barclays (but I am no 100% on that - check it out with an active adviser).


All parties to the mortgage will be jointly and severly (singularly) liable for the mortgage repayments.

You may effect the ownership as tenants in common - by which you can apportion division of ownership in the property in whatever % you require i.e, 40,40,20 or whatever division you choose - but that doesn't change the responsbiliites of any individuals party to the mge itself i.e joint and severally liable.

Hope this helps

Holly

seven-day-weekend

Thanks Holly, yes that helps a lot. We are all going on the mortgage as none of us have big incomes (my husband and myself are Pensioners) and it can only be for thirteen years because of my husband's age. The mortgage multiple can be based on my husband's and son's incomes.

I have asked at a bank and a Building Society and been OK'd in principle for a mortgage of up to £40k. As the properties we are looking at are around £70k, this will be fine and our son can afford the repayments.

Thanks for your help.

holly_hobby

Pleasure ... good luck

H x

Jeffrey_Shaw

miss_mollie wrote: »

As far as I am aware, its only for married or civil partnership couples - so yourself and your hubby could do this, but not if your son is one of the owners.

No. A Trust Deed can be used even in this case.