Landlord Income Tax

bmw5series

Hi,
Can anyone advise on how I can reduce paying too much tax on our Rental Property? My wife and I own a property that we rent out. The property is in both our names and the yield from this property. gets paid into our joint Bank Account. However she is a 20% Tax payer , I am 40%. When it comes to our Annual Tax Returns, I am paying alot more Tax. Is there a way of her paying the bulk of it so the majority of the yearly yield is paid at 20% as oppose to half of it (mine) being paid at 40%? Many thanks, Gary

laticsforlife

In order to shoft profit around so you take advantage of the 20% rate band, you'd have to change the beneficial ownership from 50:50 currently to some other proportion that you can work out.

But in doing so you will have made a Chargeable Gain on the 'sale' from you to your wife, and so that in itself creates other issues.

so there is no simple answer unfortunately.

Tank40

I've just started looking into CGT for rental properties and I'm not sure but shifting the ownership might also shift the personal CGT allowance if you were to sell the rental property?

BoGoF

laticsforlife wrote: »

In order to shoft profit around so you take advantage of the 20% rate band, you'd have to change the beneficial ownership from 50:50 currently to some other proportion that you can work out.

But in doing so you will have made a Chargeable Gain on the 'sale' from you to your wife, and so that in itself creates other issues.

so there is no simple answer unfortunately.

No it won't.

Transfers between husband and wife are exempt ftom CGT.

00ec25

laticsforlife wrote: »

But in doing so you will have made a Chargeable Gain on the 'sale' from you to your wife, and so that in itself creates other issues..

rubbish

transfers between legally married spouses who are also living together at the date of transfer, are on a no gain, no loss, basis

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg22240

00ec25

Tank40 wrote: »

I've just started looking into CGT for rental properties and I'm not sure but shifting the ownership might also shift the personal CGT allowance if you were to sell the rental property?

keep looking

not sure what you mean but you can't "shift" a CGT personal allowance, since it is an allowance for a person and either that person has a gain or they don't.

if they do, they claim their allowance to reduce their taxable gain
if they don't, they "lose" their allowance as it is unused.

Tank40

00ec25 wrote: »

not sure what you mean but you can't "shift" a CGT personal allowance, since it is an allowance for a person and either that person has a gain or they don't.

What I meant was, if A and B have 75% & 25% stakes in a property they are selling and CGT is payable, I was wondering if B for instance would not get their full CGT allowance.

Which makes me think if you add another owner, would there be another CGT allowance to reduce the liability? Hmmm...

00ec25

Tank40 wrote: »

What I meant was, if A and B have 75% & 25% stakes in a property they are selling and CGT is payable, I was wondering if B for instance would not get their full CGT allowance.

Which makes me think if you add another owner, would there be another CGT allowance to reduce the liability? Hmmm...

using 19/20 tax rates

A gets 12,000 allowance
B gets 12,000 allowance

if each person's respective share of the gain is <12k, fine each gets to deduct 12k from the respective gain

if B share of the gain is <12k, then B gets to deduct the gain full using however much they need from their 12k and the remainder of the 12k is available for any other gains that year. if no further gains, then the unused amount is lost

if another owner comes along, so A, B & C share the gain between them, the situation is as i explained above, each gets 12k which they may, or may not, need in full to reduce their respective gain

can i suggest you start at the beginning:
https://www.gov.uk/capital-gains-tax

Sibbers123

Transfer to your wife using a declaration of trust. You will need a solicitor to draw up the trust deeds.

There won't be any CGT (a few exceptions which are v.rare) if you are married.

If there is a mortgage, they may be some stamp duty land tax to pay.

Regarding the DoT - you are essentially gifting your wife the property so she could sell it and run away with the proceeds if she wanted to.