Property transfer to spouse - when to calculate taxes?

Waldir

Hi all,

My wife and I own a property in my name only, which we have now been letting for 2 years.

As I'm just reaching the 40% tax bracket, and the mortage is about to end (in May), we would like to transfer the property to both our names.

This should reduce our income taxes, as she is still well into the 20% bracket.
Assuming we do it before 5th April 2013, will the transfer affect taxes for the whole year 2012-2013, or will it be approportioned to the number of days where both our names are on the deeds?
(I'm trying to figure out if it's worth paying off the mortage early).


Thanks a lot, and happy new year!

00ec25

apportionment - she had no entitlement to the income before the exact date she become an effective owner

CLAPTON

I'm not sure what 'My wife and I' own a property means ... does she or does she not?

have you ever lived there?

income tax will be based on the income received in the tax year; so if e.g. she become joint owner in July then her share of the rental income from that date will be hers and taxed accordingly.

Waldir

Thanks both for your answers!

CLAPTON wrote: »

I'm not sure what 'My wife and I' own a property means ... does she or does she not?

have you ever lived there?

ok... I own it (for the "full" story, we used both our incomes to pay for it, but we couldn't originally get a joint mortgage due to her being foreigner, new in the country, etc - lots of bad memories sorting this one out 7 years ago)
We both lived there together for 5 years before having to move and let it out.

But thanks for your quick replies, apportionment it is

Have a nice new year

CLAPTON

Waldir wrote: »

Thanks both for your answers!




ok... I own it (for the "full" story, we used both our incomes to pay for it, but we couldn't originally get a joint mortgage due to her being foreigner, new in the country, etc - lots of bad memories sorting this one out 7 years ago)
We both lived there together for 5 years before having to move and let it out.

But thanks for your quick replies, apportionment it is

Have a nice new year

but....................

if there property is legally yours (and not hers) and you actually lived there then you will qualify fo cgt reliefs when you sell

so you will have principal private residence relief for the period you lived there plus the last three years of ownership, plus letting relief (and of course cgt allowance 10,600)
in many cases this means there is no cgt payable.

if you transfer half to your wife then you still retain your right to these reliefs but only on half the value but she will not get these (except cgt allowance of 10,600)

so do work this out before just transferring ownership if capital gains are likely to be an issue.

Ainsley1

Tut tut. Is this not another attempt to avoid paying tax by entirely legal means....:D

Don't be too hasty, make sure you look at all the options and consequences and then go for it mate!

Oh and why do we castigate others for doing just the same avoidance ???

CLAPTON

Ainsley1 wrote: »

Tut tut. Is this not another attempt to avoid paying tax by entirely legal means....:D

Don't be too hasty, make sure you look at all the options and consequences and then go for it mate!

Oh and why do we castigate others for doing just the same avoidance ???

Off topic but the answer is that we don't.

It was clearly parliaments intention to allow these PPR and letting reliefs against cgt. These are mainly seen as fair as much of the 'capital gain' is simply inflation and not gain in 'real' terms.

It was not parliaments intention to allow complicated royalties and untrue transfers and fees across national boundaries.