Joint ownership for BLT split

rahulbuyer

I'm planning to invest in a BTL property.
The decision I want make is - whether the property should be bought as joint owner or sole on my wife name?

Let me explain the use case better. I'm on higher tax bracket and my wife is on standard tax bracket. We expect the rental income to be £1000/- per month so £12k per year. If I deduct £1k/- as expences then the net income would be £11k/-.

Now if I add this income to her employment income then total income would be few grands over the standard tax rate hence I was tinking of property as joint.

So finally, what seems sensible to me is to split the ownership share between me and my wife as 25:75. so she get advantage of lower tax bracket and also later on when we sell the property and get any capital gains then can split profit and get any capital gains tax relief advantage.

Do you see any issue with this plan? and if it is possible to buy propery in such joint ownership way?
Do you see any issue with taking mortgage given that we have 25% deposit available jointly?

Thanks

fishpond

How much do you trust your wife?

rahulbuyer

I trust her 100%.

breaking_free

I'm glad you clarified that you're referring to a Buy To Let property. From the thread title I thought this was joint ownership of a Bacon, Lettuce, Tomato sandwich.

marksoton

rahulbuyer wrote: »

I'm planning to invest in a BTL property. Good luck,you do realise the implications yes?
The decision I want make is - whether the property should be bought as joint owner or sole on my wife name? Does your wife on her own meet the lenders criteria ?

Let me explain the use case better. I'm on higher tax bracket and my wife is on standard tax bracket. We expect the rental income to be £1000/- per month so £12k per year. If I deduct £1k/- as expences then the net income would be £11k/-.
£1K? What about your solicitor costs etc?

Now if I add this income to her employment income then total income would be few grands over the standard tax rate hence I was tinking of property as joint.

So finally, what seems sensible to me is to split the ownership share between me and my wife as 25:75. so she get advantage of lower tax bracket and also later on when we sell the property and get any capital gains then can split profit and get any capital gains tax relief advantage. Not going to happen

Do you see any issue with this plan? and if it is possible to buy propery in such joint ownership way?
Do you see any issue with taking mortgage given that we have 25% deposit available jointly? Yes, plenty.

Thanks

I'm no tax expert but what i do know is HMRC are actually no mugs.

nubbins

Ignore the ballax above, declaration of trust and form 17 and a 99:1 split if you wish. You can do this yourself using a template and sending together with the form 17 to your local tax office. I would get a few hours expert tax advice if I was you.

https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

booksurr

rahulbuyer wrote: »

Let me explain the use case better. I'm on higher tax bracket and my wife is on standard tax bracket. We expect the rental income to be £1000/- per month so £12k per year. If I deduct £1k/- as expences then the net income would be £11k/-.

Now if I add this income to her employment income then total income would be few grands over the standard tax rate hence I was tinking of property as joint.

so you are higher rate taxpayer and she is standard

if the rental income takes her over the standard rate then surely that means you are both higher rate so the split is irrelevant - your post is somewhat confusing?

rahulbuyer wrote: »

So finally, what seems sensible to me is to split the ownership share between me and my wife as 25:75. so she get advantage of lower tax bracket and also later on when we sell the property and get any capital gains then can split profit and get any capital gains tax relief advantage.

as you are married you can transfer ownership between the 2 of you any time you want without triggering a CGT liability. However, you are correct that at the time you finally sell it then yes if you both own it you both have your personal allowances to offset any tax due on your respective share of the gain.

As the property is not your main home worry about eventual CGT is irrelevant at the point of purchase since you can always make her an owner later. Focus on the income tax exposure at this stage, not the CGT exposure

rahulbuyer wrote: »

Do you see any issue with this plan? and if it is possible to buy propery in such joint ownership way?
Do you see any issue with taking mortgage given that we have 25% deposit available jointly?

of course you can buy jointly, but only if you both meet whatever lending criteria conditions are imposed - assuming you need a mortgage to fund the purchase

csgohan4

breaking_free wrote: »

I'm glad you clarified that you're referring to a Buy To Let property. From the thread title I thought this was joint ownership of a Bacon, Lettuce, Tomato sandwich.

It's lunchtime and I was thinking of the bacon lettuce Tomato sandwich too lol

rahulbuyer

Sorry for the typo . Yes I meant "Buy to Let" Property

rahulbuyer

nubbins wrote: »

Ignore the ballax above, declaration of trust and form 17 and a 99:1 split if you wish. You can do this yourself using a template and sending together with the form 17 to your local tax office. I would get a few hours expert tax advice if I was you.

https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

This is great. Thanks for the information

rahulbuyer

booksurr wrote: »

so you are higher rate taxpayer and she is standard

if the rental income takes her over the standard rate then surely that means you are both higher rate so the split is irrelevant - your post is somewhat confusing?

as you are married you can transfer ownership between the 2 of you any time you want without triggering a CGT liability. However, you are correct that at the time you finally sell it then yes if you both own it you both have your personal allowances to offset any tax due on your respective share of the gain.

As the property is not your main home worry about eventual CGT is irrelevant at the point of purchase since you can always make her an owner later. Focus on the income tax exposure at this stage, not the CGT exposure
of course you can buy jointly, but only if you both meet whatever lending criteria conditions are imposed - assuming you need a mortgage to fund the purchase

Thanks for the detailed reply

so you are higher rate taxpayer and she is standard

if the rental income takes her over the standard rate then surely that means you are both higher rate so the split is irrelevant - your post is somewhat confusing?

Yes the rental income would take her to higher rate however still she can use the £10k/- that is left on standard rate. no? And also if we split the ownership then she will remain on standard rate