Transfer of property ownership

francohoops

I currently own a property 50/50 with my sister. It was inherited, has no mortgage and is rented on a long term contract with a housing association.
My wife is a stay at home mum, so I’d like to split my share with her so that we can take advantage of her income tax personal allowance. The original plan was 25% each.
Having spoken to my solicitor, he has advised holding the 50% share as joint tenants – so that if anything happened to me or my wife our shares would revert to each other.
My question is going forward, I planned to split the income from the rent 50/50 with my wife, so we’d both need to fill out a self-assessment form. My tax liability would subsequently fall. Now we are not actually specifying how much each of us hold out of the 50%, how would the income tax be split be viewed? Would it still be a 50/50 split, or could I increase her share and what would be the implications?
Thanks in advance
F

booksurr

you are married, tax law therefore dictates the split with your wife must be 50/50 unless you register a Form 17 with HMRC

you will need to check with your solicitor how you actually own the property with your sister. I do not think all 3 of you can own it under a joint tenancy, as by definition that would mean 33.33% each, which obviously is not what your sister is actually entitled to.

Therefore I think you would have to own it as tenants in common with sister having 50% and you and your wife splitting the remaining 50% in whatever portion you want eg 25/25, 0/50 etc

On that basis Form 17 % between you/wife must mirror the actual tenant in common split with your wife, you cannot nominate a different split for income tax purposes to that which is actually recorded as the tenant in common split between you and your wife

Form 17: http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=TS9D3da9t7I&formId=5159

System

How would holding as joint tenants work in this situation? You currently have (I assume) the property split between OH and sister as tenants in common 50/50. I don't think you are in a position to subdivide the OP's 50% as joint tenants and have this registered in the deeds.

I don't think that you can mix and match tenancy types on deeds, it's got to be one or the other.

francohoops

Thanks for your replies

The proposed split is as follows as per the draft TR1

"they hold the property on trust: as to 50% thereof for SISTER as tenants in common and

as to 50% thereof for ME and MY WIFE as joint tenants inter se"

So to be clear
the income generated from the property should be split 50:25:25 for tax purposes between my sister, me and my wife

and if either my wife or I pass away then our share reverts to either survivor

Is it a good idea to draft a will to re-iterate that point? Also if we both passed at the same time - how would I ensure our shares went to our children?

F

xylophone

pay a solicitor for proper legal advice

https://www.gov.uk/make-will/overview

http://www.lawsociety.org.uk/for-the-public/common-legal-issues/making-a-will/

http://www.step.org/online-directory might be of interest.

http://www.hmrc.gov.uk/inheritancetax/

agrinnall

Also http://freewillsmonth.org.uk/ (although only for over 55s in England and Wales).