Joint Tenants vs Tenants in Common = Tax impact?

Saint84

Hi 
My wife and I are considering a BTL property. I am a higher income rate tax payer and she is a lower rate tax payer.
I was advised to consider changing the Title Deed ownership to Tenants in Common in unequal shares to lower the tax burden for us . But just wanted to make sure this did not create any other issues e.g. bank mortgage etc

basically just want to know what things do I need to consider if going with Tenants in Common in unequal shares

MovingForwards

@Saint84 the saving tax sub-forum is a better place to ask.

Comms69

No issues in terms of mortgage etc. You are joint borrowers, but you own the property in unequal shares. 

Let's say you do 90% / 10%

Rent of £500 a month (as an example)

So £450 taxed at 20% = £90
£50 taxed at 40% = £20
Total £110

Or 50/50

£250 taxed at 20% = £50
£250 taxed at 40% = £100
Total £150

Difference of £40 a month

Obviously that's the top end of £500 rent, there's deductions you can make for letting agent fees, repairs, gas safety checks etc. Basically it's somewhat of a - "is it even worth it" train of thought.

Saint84

Comms69 said:

No issues in terms of mortgage etc. You are joint borrowers, but you own the property in unequal shares. 

Let's say you do 90% / 10%

Rent of £500 a month (as an example)

So £450 taxed at 20% = £90
£50 taxed at 40% = £20
Total £110

Or 50/50

£250 taxed at 20% = £50
£250 taxed at 40% = £100
Total £150

Difference of £40 a month

Obviously that's the top end of £500 rent, there's deductions you can make for letting agent fees, repairs, gas safety checks etc. Basically it's somewhat of a - "is it even worth it" train of thought.

Thanks for confirming no issues with the lender/bank. 
would you know what there is to declare with HMRC? 

i am also looking to the future and considering who would be mostly likely out of work (and therefore useful tax allowance at 0%). Just working out the tax implications. 

PS - how do i move this post to the sub-tax forum?

Comms69

There are allowable expenses, amongst lots of other things to consider.

@greatcrested - hey pal, would you mind posting your usual links?

Saint84

Comms69 said:

There are allowable expenses, amongst lots of other things to consider.

@greatcrested - hey pal, would you mind posting your usual links?

Yep - aware of the allowance expenses and Property Allowance - and depending on the numbers, which option to use. 

any HMRC considerations to take into account?

Comms69

Saint84 said:

Comms69 said:

There are allowable expenses, amongst lots of other things to consider.

@greatcrested - hey pal, would you mind posting your usual links?

Yep - aware of the allowance expenses and Property Allowance - and depending on the numbers, which option to use. 

any HMRC considerations to take into account?

Sorry i mean more obligations as a landlord? The poster i tagged has a series of links with easy to read guides, it's worth waiting for them.

Saint84

ok - thanks will wait for the links.
i mean just general considerations from landlord but more tax perspective. 

Saint84

Comms69 said:

There are allowable expenses, amongst lots of other things to consider.

@greatcrested - hey pal, would you mind posting your usual links?

not seen the usual links posted, can anyone help?

[Deleted User]

Saint84 said:

Comms69 said:

There are allowable expenses, amongst lots of other things to consider.

@greatcrested - hey pal, would you mind posting your usual links?

not seen the usual links posted, can anyone help?

Read the sticky at the top of the board about Tenancies in England and Wales.