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Tax on Holiday Let Income from jointly owned property

edited 30 November -1 at 1:00AM in Cutting Tax
16 replies 2.1K views
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  • jimmojimmo Forumite
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    I am no tax planner but have you thought of forming a partnership for the holiday lettings business?
    If you did then provided the partnership actually reimbursed your partner for the interest paid, the interest would become partnership interest deductible in determining the partnership profit.
    https://www.gov.uk/hmrc-internal-manuals/partnership-manual/pm163360

    The partnership agreement should allow the partners to decide between them rather than specify fixed shares.

    As you are not married, and bearing in mind that specific shares of ownership of the property is not relevant to the allocation of profits, it may be advisable to decide what share of the property you will each own with a view to the potential for Capital Gains Tax if the holiday home is to be sold in the future.
  • edited 20 July 2019 at 5:51PM
    Tom99Tom99 Forumite
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    edited 20 July 2019 at 5:51PM
    [FONT=Verdana, sans-serif]
    00ec25 wrote: »
    this is basic stuff
    please learn difference between Joint Tenant (your quote) and Tenant in Common (Op's position)
    https://www.gov.uk/joint-property-ownership
    [/FONT]
    [FONT=Verdana, sans-serif]I think its you who need to mug up on the basic stuff. The legal interest is always owned jointly, each person cannot own a percentage share in the legal estate.[/FONT]
    [FONT=Verdana, sans-serif]They can however split the beneficial ownership in whatever proportions they like which is where tenants in common and declaration of trust come in.[/FONT]
  • claire111claire111 Forumite
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    Thanks for all comments - Just for completeness I thought I would let you know that HMRC have confirmed on their forum, that the interest would be an allowable expense

    https://online.hmrc.gov.uk/webchatprod/community/posts/list/5848.page#15002

    :)
  • 00ec2500ec25
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    claire111 wrote: »
    Thanks for all comments - Just for completeness I thought I would let you know that HMRC have confirmed on their forum, that the interest would be an allowable expense

    https://online.hmrc.gov.uk/webchatprod/community/posts/list/5848.page#15002

    :)
    hmmm. Notice the answer refers to purchase of THEIR SHARE

    that still does not categorically confirm that your share of the profits are net of their share of the interest

    I'd trust the answer more if you'd asked the exact question you have on here.... and they had answered with reference to that
  • 00ec2500ec25
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    Tom99 wrote: »
    [FONT=Verdana, sans-serif]I think its you who need to mug up on the basic stuff. The legal interest is always owned jointly, each person cannot own a percentage share in the legal estate.[/FONT]
    [FONT=Verdana, sans-serif]They can however split the beneficial ownership in whatever proportions they like which is where tenants in common and declaration of trust come in.[/FONT]
    rubbish, you are still mixing up Joint Tenancy and Tenant in Common
  • edited 22 July 2019 at 7:59PM
    Tom99Tom99 Forumite
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    edited 22 July 2019 at 7:59PM
    00ec25 wrote: »
    rubbish, you are still mixing up Joint Tenancy and Tenant in Common
    [FONT=Verdana, sans-serif]How do you explain the Land Registry view on the subject? I think they know what they are talking about and you do not.[/FONT]

    [FONT=Verdana, sans-serif]'The term ‘owner’ in relation to land is generally understood to mean the legal owner and is normally the registered proprietor. When two or more people are registered as proprietor of the land they are known as ‘joint proprietors’. Their legal ownership of the land is truly ‘joint’ as the legal estate cannot be divided between them and each person cannot own a percentage share in that legal estate. There is no physical division in the land. When one joint proprietor dies, the legal estate in the whole of the land automatically vests in the surviving joint proprietor.'[/FONT]
    [FONT=Verdana, sans-serif]
    [/FONT]But since you prefer random Google results:

    https://www.mills-reeve.com/insights/publications/understanding-joint-ownership-considerations-for-co-owners
    ' While the “legal title” of the property is held by co-owners as “one” with no identifiable shares, the “equitable title” (beneficial interest) is divisible between co-owners and can be held under two types of tenancies.'
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