Can I save on tax if my wife takes out BTL?

Doogle2

As a 40% tax payer (only just though), with a wife who doesn't earn enough to even pay 20% tax, could I buy a flat for BTL and process it in her name, but manage the whole thing myself without the wife having to do anything?

theartfullodger

Hardly the act of a patriotic man, fiddling away to not pay tax! Your country needs your tax!

What about all the decent, honest hardworking people who pay tax & support this country? You expect them to subsidise you?

Welcome to MSE!

CLAPTON

If your wife buys a property in her own name and lets it out, the tax on the rental income will be charged according to her tax circumstances.

pawlala

and she can keep the income!

anselld

theartfullodger wrote: »

Hardly the act of a patriotic man, fiddling away to not pay tax! Your country needs your tax!

What about all the decent, honest hardworking people who pay tax & support this country? You expect them to subsidise you?

Welcome to MSE!

An honest hardworking 40% tax payer who is already subsidising plenty of other scroungers!

Yes OP, you can do this though your wife will be legally responsible as the owner and landlord. You can also decide to keep an interest yourself if you wish eg by owning 99%:1% and then the income is split in those proportions.

CKhalvashi

anselld wrote: »

An honest hardworking 40% tax payer who is already subsidising plenty of other scroungers!

Yes OP, you can do this though your wife will be legally responsible as the owner and landlord. You can also decide to keep an interest yourself if you wish eg by owning 99%:1% and then the income is split in those proportions.

This is the best way of doing it IMO; keep a legal interest, but split the income.

Also be aware that she may need you to guarantee/be on the mortgage to get it in the first place; HSBC wanted a minimum of £75k income from us with our circumstances.

CK

Doogle2

theartfullodger: With a name like that, I sense more than a hint of sarcasm. :rotfl: The reason I'm looking at this is because the BTL investment will be a loss making exercise as a 40% tax payer. Besides, I'll be paying tax on renovation materials and supporting other businesses while I'm doing it.

anselld: I've had the tax discussion a few times and its clear how some people don't see that higher tax payers pay soo much more to the exchequer than lower tax payers. E.g. Top 1% of earners paying 30% of all income tax, and the top 10% of earners paying 53% of all income tax.
Are you saying that I can have a 99% share and my wife can have 1% and legally, the tax on profits will be considered under her tax circumstances?

CKhalvashi: Our earnings are way short of £75k, but I do have a £25k deposit to play with.

CKhalvashi

Doogle2 wrote: »

CKhalvashi: Our earnings are way short of £75k, but I do have a £25k deposit to play with.

Another thing that you may consider with £25k is buying a house in, South Wales and renting. £30k will get you a nice little 2/3 bed property that with £10k spent on it could see you with 15-25% return on equity per year.

CK

Loopgames

CKhalvashi wrote: »

Another thing that you may consider with £25k is buying a house in, South Wales and renting. £30k will get you a nice little 2/3 bed property that with £10k spent on it could see you with 15-25% return on equity per year.

CK

Where? Where? Where?:drool:

00ec25

Doogle2 wrote: »

t
Are you saying that I can have a 99% share and my wife can have 1% and legally, the tax on profits will be considered under her tax circumstances?

no you have misunderstood. Share of rental income for married couples must exactly match the respective ownership portions. so in the 99/1 ownership case you outline, you get 99% of the income and are taxed on 99% of the resultant net profit. Wife gets 1% of the income and is taxed on 1% of the net profit

the advantage of you retaining a legal share of the ownership is:
a) if you split it may help (not my area so can't give specific example); or
b) (this is my area) it means you keep your allowances against CGT because you are still an owner so when sold the CGT liability is split in accordance with % owned but you each get your full allowances as they are flat rates not apportioned.

anselld

Doogle2 wrote: »

anselld: I've had the tax discussion a few times and its clear how some people don't see that higher tax payers pay soo much more to the exchequer than lower tax payers. E.g. Top 1% of earners paying 30% of all income tax, and the top 10% of earners paying 53% of all income tax.

yes, I agree!

Doogle2 wrote: »

Are you saying that I can have a 99% share and my wife can have 1% and legally, the tax on profits will be considered under her tax circumstances?

No, 99% her, 1% you