Form 17 - transferring 99% to wife.

Edtough

On the back of this: https://forums.moneysavingexpert.com/discussion/4925387

I've finally got round to tackling this form 17. Currently I am the sole owner of the property, but want wife to receive 99% of rent. The form 17 talks about a property that is jointly owned.....this property is not jointly owned though; only I own it. Is it still the form 17 I need to do in this case, or am I missing a step?

Kynthia

You have answered your own question, the property isn't jointly owned so all the rent goes to you. Do some research on changing the beneficial ownership of the property or add your wife to the deeds and mortgage and then you might be able to use the form 17.

booksurr

you cannot use Form 17 unless you are both owners. To be married and be a beneficial owner it is a requirement that both must have underlying legal ownership. You cannot be a beneficial owner without being a legal owner if you are married

you must be tenants in common but in that case the TIC proportion must mirror the Form 17 declaration

you cannot be a sole owner and give her the income

obviously once established the proportions can be changed as many times as you like without triggering a CGT payment since transfers within a marriage are exempt from CGT

Edtough

There is no mortgage on the property; I own it outright.

So I've got to get the wife to be a legal owner first?

Are you saying joint tenant an TIC are alternatives? These are new concepts to me.

Thanks.

booksurr

Edtough wrote: »

So I've got to get the wife to be a legal owner first?

http://www.hmrc.gov.uk/manuals/tsemmanual/tsem9850.htm

Edtough wrote: »

Are you saying joint tenant an TIC are alternatives? These are new concepts to me.

google it if you don't know
http://www.landregistry.gov.uk/public/guides/public-guide-18

Edtough

Thanks for those links. So I need to see a conveyancer about becoming TIC with my wife; her having a 99% share and me 1%.

Then I can complete the form 17 so my wife receives 99% of income.

Then sometime before selling, we'll reverse the shares so I can take advantage of my PPR.

ognum

Edtough wrote: »

Thanks for those links. So I need to see a conveyancer about becoming TIC with my wife; her having a 99% share and me 1%.

Then I can complete the form 17 so my wife receives 99% of income.

Then sometime before selling, we'll reverse the shares so I can take advantage of my PPR.

Why do you need to keep a 1% share! your wife can be the legal owner 100%, she will then have all the rental income as here's to declare to HMRC at whatever her tax level is.

booksurr

ognum wrote: »

Why do you need to keep a 1% share! your wife can be the legal owner 100%, she will then have all the rental income as here's to declare to HMRC at whatever her tax level is.

if OP relinquishes his ownership 100% in favour of his wife he loses his claim to historic Private Residence Relief and therefore also a claim to Letting Relief since the plan is to sell the flat in "4 years time".

it would be very non MSE to make wife sole owner of a property over which she has CGT liability but zero PRR and LR in such circumstances

retaining 1% ownership keeps OP's relief claims valid since his ownership period is continuous from date he lived in it to date he sold it. Also means that at a future date they can vary the ownership proportions to whatever figure they need to maximise OP's CGT relief before sale since transfer within a marriage does not trigger a "CGT Disposal", ie they can put it back to 99/1 but must do so at least before the property is put up for sale otherwise HMRC will ignore that transfer as it is done purely for tax reduction purposes and so is invalid in the eyes of HMRC

booksurr

Edtough wrote: »

Thanks for those links. So I need to see a conveyancer about becoming TIC with my wife; her having a 99% share and me 1%.

Then I can complete the form 17 so my wife receives 99% of income.

Then sometime before selling, we'll reverse the shares so I can take advantage of my PPR.

correct

OP as an afterthought as you are unfamiliar with JT and TIC concepts do think carefully about death

under JT you each own the whole property so the last person standing retains whole ownership

with TIC you each own specific shares of the property and who inherits that share is dictated by what the will says. Each of you may or may not choose to leave their respective share to the other, the children or the locals dogs home. Therefore when you convert to TIC you both must update your wills so there are no nasty surprises when a share passes to someone you didn't know about

ognum

booksurr wrote: »

if OP relinquishes his ownership 100% in favour of his wife he loses his claim to historic Private Residence Relief and therefore also a claim to Letting Relief since the plan is to sell the flat in "4 years time".

it would be very non MSE to make wife sole owner of a property over which she has CGT liability but zero PRR and LR in such circumstances

retaining 1% ownership keeps OP's relief claims valid since his ownership period is continuous from date he lived in it to date he sold it. Also means that at a future date they can vary the ownership proportions to whatever figure they need to maximise OP's CGT relief before sale since transfer within a marriage does not trigger a "CGT Disposal", ie they can put it back to 99/1 but must do so at least before the property is put up for sale otherwise HMRC will ignore that transfer as it is done purely for tax reduction purposes and so is invalid in the eyes of HMRC

thanks for this, I hadn't read carefully enough that he had lived there!! Thanks

Edtough

booksurr wrote: »

correct

OP as an afterthought as you are unfamiliar with JT and TIC concepts do think carefully about death

under JT you each own the whole property so the last person standing retains whole ownership

with TIC you each own specific shares of the property and who inherits that share is dictated by what the will says. Each of you may or may not choose to leave their respective share to the other, the children or the locals dogs home. Therefore when you convert to TIC you both must update your wills so there are no nasty surprises when a share passes to someone you didn't know about

Ah yes, sounds a good idea; as JTs can we still split the share 99/1?