BTL Property in wife's name only

kevin38

My wife and I have a BTL property with no mortgage. It was left to her at the beginning of 2014 and is currently rented.

1. Can I assume that when it time to do a tax return next year she will have to do this and not me as it is in her name only?

2. Would it be advisable both practically and financially to add my name to the deeds? my wife doesn't really want to have anything to do with the renting business and wants me to deal with all the financial and day to day running of it.

3. If it were in joint names could we somehow share the tax relief i.e. she submits half the profit on the tax return and I submit the other half (this way it keeps up both under the 40% tax bracket)

Thank you

ognum

Tax payable on rental income is directly related to the legal share of ownership of the property so if she owns it outright then your wife is liable for the tax and the tax return.

You need to own the property in the most finacially savy way you can so if your are a higher rate tax payer and your wife is not then it is better that she owns it, if it's the other way round then if is better that you won it etc etc.

You also need to consider your CGT allowances when you come to sell!

kevin38

we both earn around the same amount £25k per year.
It is my understanding that it would be financially beneficial to have it in joint names for CGT because we can both claim allowances against the profit (but we don't intend to sell for a few years).

But what about joint ownership with regards to the profit made each year from rental income, is there any benefit from having it in joint names for that?

00ec25

kevin38 wrote: »

we both earn around the same amount £25k per year.
It is my understanding that it would be financially beneficial to have it in joint names for CGT because we can both claim allowances against the profit (but we don't intend to sell for a few years). But what about joint ownership with regards to the profit made each year from rental income, is there any benefit from having it in joint names for that?

income tax
The 40% tax band starts at £41,866 (10,000 personal allowance + 31,865 20% band) so, realistically, given each of you has only a £25k income, is either one of your ever going to be above that when your NET PROFIT from the rental is added to give your total taxable income?
Even without a mortgage cost to claim, that means your net profit would have to be more than £16,866 pa (1,505 pcm)

if not then whether it is single or joint ownership is irrelevant for income tax as the total tax take will be 20% whether that is paid by one or split between 2 of you

if it will be, then as a married couple, you must declare how you want the share of profit to be split between you using a Form 17 and you must own the property as tenants in common, it cannot be a joint tenancy

CGT
a) you are married, it matters!
b) you say she inherited it so currently there is no "we" in the discussion it is her sole CGT liability
c) assuming she was already married to you when she inherited it then have you (as a married couple) ever lived in the property as your marital home? If no then we can forget about claiming private residence relief and letting relief, leaving the only valid CGT mitigation the ability to each claim the personal allowance

married couples can transfer ownership between each other as many times as they like without any CGT implications but doing so immediately before a sale attracts HMRC attention and posts on here from some years ago suggest HMRC deny the personal allowance claim from the new owner.
Of course things may be different when you come to claim, but as a start point you would be best advised to transfer ownership into both names some 12 months before you market the property for sale then there is no clear link for HMRC to worry at

you would need to own enough of the proeprty to meake your share of the gain equal to at least the personal allowance. so a 1% 99% split may not work in that case and one of you would need to own more - obviously in that case your income tax share must align

kevin38

Thank you...
So once we've put the deeds into joint names can I just submit the profits on my self assessment that I do each year (I already own another business so complete one already) or would we both have to submit one?

scottishblondie

kevin38 wrote: »

Thank you...
So once we've put the deeds into joint names can I just submit the profits on my self assessment that I do each year (I already own another business so complete one already) or would we both have to submit one?

You would both need to report to the HMRC separately.

00ec25

kevin38 wrote: »

Thank you...
So once we've put the deeds into joint names can I just submit the profits on my self assessment that I do each year (I already own another business so complete one already) or would we both have to submit one?

since women were liberated they get rather upset is you still treat them as a chattel of the husband,
she reports her own tax affairs in her own name, it's her money not yours, even if she is your wife :rotfl: