Property Transfer of Ownership & Income Tax

love2learn

Hi,

My wife and I are considering paying off our joint mortgage. We currently rent our house out that the mortgage is on, and we live in a rented property a few hundreds miles away where my wife works. My wife is a higher rate tax payer, but I'm a stay at home dad.

I know that I still get a tax free allowance £9440 this tax year, rising to £10,000 in the 2014 - 2015 tax year. What I want to know is, if we were to pay off our mortgage and then transfer the deeds of the house into my name only, would I then be permitted to use my tax free allowance on the income of our property, which is under £10,000 per year? Or by transferring the deeds to my name only, would that be seen as tax avoidance?

zygurat789

love2learn wrote: »

Hi,

My wife and I are considering paying off our joint mortgage. We currently rent our house out that the mortgage is on, and we live in a rented property a few hundreds miles away where my wife works. My wife is a higher rate tax payer, but I'm a stay at home dad.

I know that I still get a tax free allowance £9440 this tax year, rising to £10,000 in the 2014 - 2015 tax year. What I want to know is, if we were to pay off our mortgage and then transfer the deeds of the house into my name only, would I then be permitted to use my tax free allowance on the income of our property, which is under £10,000 per year? Or by transferring the deeds to my name only, would that be seen as tax avoidance?

Yes, everyone does it and yes it is tax avoidance which is perfectly legal just like investing in an ISA.

antrobus

love2learn wrote: »

.... What I want to know is, if we were to pay off our mortgage and then transfer the deeds of the house into my name only, would I then be permitted to use my tax free allowance on the income of our property, which is under £10,000 per year?

Yes.

love2learn wrote: »

.... Or by transferring the deeds to my name only, would that be seen as tax avoidance?

Of course it's flippin 'tax avoidance'! But put it this way; Gordon Brown, when he was PM, transfered the title of his house into his wife's name, so that she got taxed on the rental income rather than paying it himself. Or to put it another way; avoiding tax is perfectly normal behaviour, 100% legal, and the only downside is that the Guardian might not say nice things about you.:)

love2learn

Thanks for the quick reply, especially the comment about Mr Brown hahaha

zygurat789

love2learn wrote: »

Thanks for the quick reply, especially the comment about Mr Brown hahaha

Why shouldn't GB be able to do what every other taxpayer does?

Tax avoidance has only become a dirty word since Cameron & Osborne started their tirade. They might just as well berate someone for driving at 29 in a built up area.

Gas_Powered_Toothbrush

antrobus wrote: »

the only downside is that the Guardian might not say nice things about you.:)

You'll also be ensuring there's less money to fund public services. If anyone doesn't think that's a downside then they should be ashamed of themselves.

le_loup

Tax avoidance that Parliament sanctions is perfectly acceptable, ISAs, asset transfers between spouses, pension contributions ... all OK.
Suggesting Amazon has no UK trade ... is not.

zygurat789

Gas_Powered_Toothbrush wrote: »

You'll also be ensuring there's less money to fund public services. If anyone doesn't think that's a downside then they should be ashamed of themselves.

Public services account do not take all government spending. Just like any ordinary taxpaye the government can make economies especially when, recently, the government accounted for over 50% of GDP.
If you want to fund public services feel free to pay tax at 100% I don't mind.

00ec25

love2learn wrote: »

My wife and I are considering paying off our joint mortgage.

please note that because you are married then in addition to the land registry transfer you must complete a form 17
http://www.hmrc.gov.uk/forms/form17.pdf

and submit this to HMRC showing the ownership transfer is now 100% to you otherwise HMRC can (and will) keep it at 50/50
http://www.hmrc.gov.uk/manuals/tsemmanual/tsem9852.htm
all you do is fill it out, attach the new land registry notification and send it off within 60 days of doing the form, nothing difficult but send it you must and within that timelimit
http://www.hmrc.gov.uk/manuals/tsemmanual/tsem9862.htm

Savvy_Sue

Does it not also have implications for Capital Gains Tax when you sell the property (assuming you intend to do so?)

madgagoo

Savvy_Sue wrote: »

Does it not also have implications for Capital Gains Tax when you sell the property (assuming you intend to do so?)

Yes, only one annual exemption.

However you could just make another transfer back into joint names, before sale and thereby have 2 annual exemptions.