Potential naive tax question

yorica

Hi everyone

I have a BTL mortgage in my name and declare my rental income for tax purposes.

As I'm married does the IR automatically see the property as jointly owned and therefore I should have instead split the income 50/50 between my wife and I.

Have I over paid tax and can potentially claim it back?

Any advice is appreciated.

CLAPTON

yorica wrote: »

Hi everyone

I have a BTL mortgage in my name and declare my rental income for tax purposes.

As I'm married does the IR automatically see the property as jointly owned and therefore I should have instead split the income 50/50 between my wife and I.

Have I over paid tax and can potentially claim it back?

Any advice is appreciated.

no they don't


marriage doesn't make property jointly owned

Your_Hero

yorica wrote: »

Hi everyone

I have a BTL mortgage in my name and declare my rental income for tax purposes.

As I'm married does the IR automatically see the property as jointly owned and therefore I should have instead split the income 50/50 between my wife and I.

Have I over paid tax and can potentially claim it back?

Any advice is appreciated.

No they do not, but it might make sense to add the other half onto the property to split the income.

yorica

Many thanks for your prompt response.

I would appreciate it if you could advise on whether I should investigate a more beneficial share of rental income via form 17 to fully utilise my wife's tax allowance as I'm at higher rate of tax.

Does this need to be backed up with a deed of trust?

Could I potentially split the rental income 99/1 in my wife's favour to minimise my tax burden?

I'm also unsure of whether I need to inform my mortgage company because of this.

Thanks again

Your_Hero

yorica wrote: »

Many thanks for your prompt response.

I would appreciate it if you could advise on whether I should investigate a more beneficial share of rental income via form 17 to fully utilise my wife's tax allowance as I'm at higher rate of tax.

Does this need to be backed up with a deed of trust?

Could I potentially split the rental income 99/1 in my wife's favour to minimise my tax burden?

I'm also unsure of whether I need to inform my mortgage company because of this.

Thanks again

I'm not so sure. Theoretically yes you can split the rental income as you like. But in practice, due to anti-avoidance laws, it's better to stick to the standard 50/50 split.

The other alternative of course would be to gift the whole property to your wife so she receives 100% of the rental income. But this is creates a different problem of its own...

jamesd

If the property was acquired during the marriage from income earned during the marriage that probably deals with most of the divorce-related complications of just giving the property to your wife. It'd still be part of the marital assets so still split on divorce.

You can't just split the rental income, though. You have to really split the ownership interest.