Tax on rental income if property jointly owned

itm2

I have a question regarding tax liability for rental income where the property is in joint names.

My wife owns a BTL property which provides gross annual rental income of about £10k. She also has income from self-employment of around £8k per annum. Hence she's paying around £1,700 per year in tax.

A couple of months ago I took early retirement (aged 53), but will not be receiving any pension income until April 2015. Since I will have no taxable income between now and then, we'd like to capitalise on my tax status for that tax year.

My questions are:
- if we add my name to the land registry for the BTL property, would it be legal for 100% of the rental income to be attributed to me for tax purposes next year, or would that require that the property to be transferred entirely to me?
- can the allocation of rental income be changed in subsequent years, to maximise the use of our joint tax allowances?

ognum

Tax liability is apportioned according to ownership so if your wife owns it she has 100% liability. If you own I'd 50/50 then income and tax is treated as half each.

If you both own the property you will both be liable to submit self assessment tax forms

you do not say if the property has a mortgage, you will have difficulty changing the ownership unless you can get the mortgage company to agree.

itm2

ognum wrote: »

Tax liability is apportioned according to ownership so if your wife owns it she has 100% liability. If you own I'd 50/50 then income and tax is treated as half each.

If you both own the property you will both be liable to submit self assessment tax forms

you do not say if the property has a mortgage, you will have difficulty changing the ownership unless you can get the mortgage company to agree.

Thanks - that would make sense. No, there's no mortgage on the property.

I suppose we now have to consider whether it's worth the hassle and expense for a year's worth of tax saving!

00ec25

as you are married then you have to go through another hoop. Not only must your income split mirror the ownership, but you also have to notify HMRC that you have split the income in accordance with that fact using their Form 17.

If you do not submit a Form 17 HMRC will continue to tax your wife at 100%
http://www.hmrc.gov.uk/forms/form17.pdf

Kynthia

If you are married joint owners then the HMRC insist that the rental income is split according to the ownership percentage. If that percentage is not equal (50:50) you need to complete a form 17. If the joint owners of a property are not married then the rules are slightly different.
http://www.hmrc.gov.uk/manuals/tsemmanual/TSEM9814.htm