Beneficial Ownership - Help with apportioning %

Repromancer

Hi all,

I really need help in deciding how to allocate percentage ownership of our current main property for income tax and CGT purposes. I am 40% tax earner, my wife is 20%.

Point 1) Through 'Tenancy in common' I have recently added my wife; and our declaration of trust is being prepared; we just need to pick the %.

Point 2) I lived in the property before, and it continues to be our main home i.e. our marital main residence, but most likely going to rent it out in few years, and then possibly sell.

Now I have 3 options:

Option 1) 99%-1% (me-wife).
I continue to own 99% keeping all PRR earned, no rental tax is due as we live in it. Rent it out in the future, but do not submit a Form 17, and pay 50%-50% tax, then submit a Form 17 a year before selling. Will this be an issue if we paid rental tax 50-50?

Option 2) 50%-50% (me-wife).
Same scenario as above. The assumption with this option is, wife inherits the PRR anyway, so no need to revert it back to 99% me, or if we need to revert back, we will.

Option 3) 1%-99% (me-wife).
Same assumption as Option 2 with regards to inheriting PRR, however with this option SDLT is possibly due because the debt being transferred over is greater than 125k (216K to be exact). So a £1820 SDLT bill. Please correct me if I am wrong?

I know you can change beneficial ownership as much as you want, obviously doing so is not going to make HMRC happy, so I wanted to avoid making changes.

However, if I had to there is one Final Option, which is:

First do 50%-50%, then change it to 1%-99% in few years. No SDLT is payable as the debt being transferred over is less than 125k (216/2 = 108k) for each transfer.
Then change it back to 50%-50% well in advance of sale, and then if required change it back to 99%-1% (wife).

What a dilemma.


Please share your thoughts and advises!