Tax Savings for Landlords

The_Palmist

Hi MSE,

Landlord with 1 property, we kept the house as a university fund for kids and have worked hard to make ends meet. We have made no profits and with the rule changes I will be making a small loss.

I am in higher tax bracket.

Appreciate there is little sympathy for landlords and government doesn't see them as potential vote banks.

Rented house is in only my name and my wife doesn't work.

Is there any way I can save on tax or make rental income her income so her tax allowance come in to play.

All other ideas and suggestions welcome.

Thanks in advance

bris

Go see an accountant. You can't make a house in your name only your wife's income. You can however employ your wife to manage the property for you.


An accountant can help.

Newnoel

How much mortgage is outstanding on the property?

What is the current value? How much did you pay for it?

theartfullodger

Some you win, some you lose.

Artful: (Landlord....)

Newnoel

The_Palmist wrote: »

Hi MSE,

Landlord with 1 property, we kept the house as a university fund for kids and have worked hard to make ends meet. We have made no profits and with the rule changes I will be making a small loss.

I am in higher tax bracket.

Appreciate there is little sympathy for landlords and government doesn't see them as potential vote banks.

Rented house is in only my name and my wife doesn't work.

Is there any way I can save on tax or make rental income her income so her tax allowance come in to play.

All other ideas and suggestions welcome.

Thanks in advance

This:

https://www.yorkshirepost.co.uk/lifestyle/homes-gardens/how-married-couples-can-reduce-tax-burden-of-buy-to-let-1-8428134

00ec25

The_Palmist wrote: »

Hi MSE,

Landlord with 1 property, we kept the house as a university fund for kids and have worked hard to make ends meet. We have made no profits "we" have not, you have, given the * statement below and with the rule changes I will be making a small loss.

I am in higher tax bracket.

Appreciate there is little sympathy for landlords and government doesn't see them as potential vote banks.

Rented house is * in only my name* and my wife doesn't work.

Is there any way I can save on tax or make rental income her income so her tax allowance come in to play. yes, it is actually pretty standard stuff

All other ideas and suggestions welcome.

Thanks in advance

as sole owner, she cannot have any rent income in her name until you "give" her an entitlement to it - technically that means making her a beneficial owner

as you are (legally) married, there are specific rules... she must have a share of the ownership which means you need to convert the ownership to Tenants In Common (do NOT do Joint Tenants)

once you have done that, she is then entitled to a definable share of the income. The TIC share can be set at whatever you want it to be. The rules then require:
a) a Declaration of Trust documented stating your respective income shares
b) a Form 17 completed and sent to HMRC
https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

Because you are married, you can vary the above as many times as you want without triggering any capital gains tax for either of you. Obviously when you do finally sell up each of you will be liable for CGT on your respective share of the property

From what you have written the property is mortgaged, naturally therefore you will need to add her to the mortgage and sort out with the lender whether they will allow that in the first place and /or change the rate as a result.

Note
She absolutely cannot declare the income as her personal income for tax purposes unless you do the above

see Form 17 page here:
https://www.deedoftrust.co.uk/hmrc-guidance/

Thrugelmir

The_Palmist wrote: »

We have made no profits and with the rule changes I will be making a small loss.

Personally I sell underperforming investments what ever they might be. Hanging onto something in the hope that it's going to come good in the future is rarely a good idea.

The_Palmist

Newnoel wrote: »

How much mortgage is outstanding on the property?

What is the current value? How much did you pay for it?

60k mortgage left
Paid 140
Current value around 150 going by most recent sale of a house next door.

silvercar

Thrugelmir wrote: »

Personally I sell underperforming investments what ever they might be. Hanging onto something in the hope that it's going to come good in the future is rarely a good idea.

Sometimes all that does is crystallise your losses. It could be worth holding on to if prices could increase.

The_Palmist

silvercar wrote: »

Sometimes all that does is crystallise your losses. It could be worth holding on to if prices could increase.

I am definitely holding on even if it means putting up with a loss for time being. Keeping it as university funds when kids grow up.

Yes, I do appreciate the prices can fall.

ognum

The_Palmist wrote: »

Hi MSE,

Landlord with 1 property, we kept the house as a university fund for kids and have worked hard to make ends meet. We have made no profits and with the rule changes I will be making a small loss.

I am in higher tax bracket.

Appreciate there is little sympathy for landlords and government doesn't see them as potential vote banks.

Rented house is in only my name and my wife doesn't work.

Is there any way I can save on tax or make rental income her income so her tax allowance come in to play.

All other ideas and suggestions welcome.

Thanks in advance

The obvious question is why is the property in your name (apart from historic), why have you not transferred it to your wife.

You are married it isn’t a marital asset as such it belongs to you both in divorce or would (depending on your wills) pass to her on your death anyway.

Why?