Joint Tenants/Tenants in Common

SeaOtter_2

Can anyone tell me the things I should be considering when deciding whether to add my partner to my rental property as a joint tenant or tenants in common with unequal shares?

As I don't work & he gets a full wage I was planning on adding him with only a 1% share so he is liable for only 1% tax however as we are hoping to move to France would I be best having it as 50% each so we both get personal tax relief prior to tax?

As a separate but related question, do we get to chose where we pay this tax, France or the UK?

I hope someone can advise me .. my head is getting so confused with it all I'm considering throwing a dart & ticking the box it lands closest to!!

Cheers!

booksurr

SeaOtter wrote: »

Can anyone tell me the things I should be considering when deciding whether to add my partner to my rental property as a joint tenant or tenants in common with unequal shares?

As I don't work & he gets a full wage I was planning on adding him with only a 1% share so he is liable for only 1% tax however as we are hoping to move to France would I be best having it as 50% each so we both get personal tax relief prior to tax?

on the assumption you are both UK citizens (UK passport holders) you will both still get UK personal allowance when living abroad. You will only be taxed on your UK earnings so yes it would be more tax efficient to ensure his share of the rental profit is at least equal to his allowance. But then the same applies to you if you will cease to be subject to UK income tax if your job is now abroad and is taxed under the rules of that country. therefore you won't be a UK higher rate taxpayer anymore anyway. So what the "best" split will be is down to your maths on what you have budgeted as the net profit

SeaOtter wrote: »

As a separate but related question, do we get to chose where we pay this tax, France or the UK?

LOL is that a real question? If you live in France you are subject to French tax on all your income no matter where it comes from HOWEVER, there is a tax treaty in place which means you will not be taxed on the same amount by both UK and France. the default is you will pay UK income tax on your UK rental income and French tax on your French job/income.
Read this https://www.gov.uk/government/publications/france-tax-treaties-in-force

SeaOtter_2

Thanks Booksurr! The second one was a real question! I know there is a tax agreement, but I believe French taxes are higher so being able to pay tax on the rental income in the UK would probably be beneficial. There is so much to look in to in a short period of time it's all getting a little confusing!! We'll be living in France, but have no jobs to go to .. hoping to start small businesses to feed ourselves. We were never in the higher rate bracket, but good to know by splitting it evenly we both get to take our personal allowance out of any rent profits. Have to do some maths now

Thanks again!

SeaOtter_2

Thanks for the link but OMG! That makes no sense!! Where are the Plain English Campaign when you need them!

booksurr

forgot to add the other link for you to enjoy:
https://www.gov.uk/tax-uk-income-live-abroad/rent

you MUST do this as you will have UK rental income, two, but not all of the key points, are:
- your tenants must be given an address in the UK via which you can be contacted. Failure to do so means they can legally refuse to pay you any rent at all
- your tenant must deduct 20% income tax (and pay it to HMRC) from the rent they pay you unless you prove to your tenant that you have registered under the NRL scheme. Only in that case can you receive 100% of the rent and do your own tax return to HMRC

CLAPTON

one assumes your rental property has never been your own residence?

SeaOtter_2

Hi Clapton,

I used to live there. Does it make a difference?

booksurr

SeaOtter wrote: »

Hi Clapton,

I used to live there. Does it make a difference?

depends....
when it is sold the current owners will be liable to CGT as it is purely a let property at the moment

as a previous residential occupant you have a claim to private residence relief and letting relief which will reduce your own tax exposure, but your partner does not get those

therefore you need to consider the big picture:
aggregate amount of income tax on rental profit when split between the 2 of you

compared to

a) you being the sole opwner and getting the maximum CGT releif but only 1 personal allowance
b) you both being owners, you lose part of your PRR and LR but he brings his personal allowance into the mix

which is most tax efficient depends on i) the values involved and ii) your guess as to how long before you sell and thus incur CGT