Buy to Let Income Tax Advice.

PierremontQuaker03

Just after a bit of tax advice.
I have nearly paid off my current home and am thinking of buying another home to move into with my wife.
My wife is not on the deeds of our current home.
So I am thinking of buying a new house for 200k - to pay this by (in simple terms) 100k repayment mortgage and 100k on my current home on a BTL mortgage (renting my current property out).
Anyway, I am nearly a 40% tax payer and my wife doesn't earn enough to pay tax at the moment, so I would like the BTL income to go to her, and I will help her fill in and register for self assessment.
As I will be applying for the BTL mortgage as my wife doesnt earn enough, can I still allocate the BTL income to her? Shall I put her on the deeds of the house?
Any advice on this situation please let me know - or if you need any further info let me know - thanks

nomunnofun

In simple terms, if your wife does not own the property (is not on the deeds) she cannot be said to receive the income. If the property is owned jointly, you will each be taxable on half of the profit and she will also be required to complete a self assessment tax return.

PierremontQuaker03

thanks for the response - I will look to get my Wife on the deeds on the house then, as its a job that can be done before everything kicks off. I know it will set me back a few hundred but with the savings in Tax it will be worth it!

Kynthia

As stated above, when married and both on the deeds the HMRC will impose a 50:50 split on the rental profits and tax liability. You may be able to change this split by making a declaration on form 17 to the HMRC. However I know little of this and how it will affect the capital gains tax liability in the future.
Is it possible to put the whole property in your wife's name? I'm not sure but many BLT mortgages are unconcerned with the employment earnings of the applicant but with the rental income of the property in question.

somethingcorporate

Kynthia wrote: »

I'm not sure but many BLT mortgages are unconcerned with the employment earnings of the applicant but with the rental income of the property in question.

I am not sure that is true.

Many B2L mortgages require minimum incomes (£20k-£25k) and for them to already be a home owner.

It may not be worth the hassle, are you even going to be making a taxable profit? At 50:50 you'd only be paying a 10% rate anyway assuming you stay under the 40% tax band.

PierremontQuaker03

Thanks for the responses - will look at transfering the house into my wife's name - surely my wife could apply for a BTL mortgage and me (the husband) I could be the guarantor?
I will look into if this could be done first before I start changing deed's.