Liable to Pay Tax for income in Joint Ownership?

vienly

Hello,

My dad who is near retirement age is looking to buy a property to let out and treat the income as his pension, however he wants me (his son) to be a named as a joint owner for when the time comes and he is no longer here, I will hold full ownership of the property.

Question is, will I be liable to capital gains tax if all the money is going directly to him, and nothing towards me?
Can anyone explain how the tax purposes work for joint ownership of the property?

I have done a Google search but couldn't find the specific answer.
I have done the HMRC 'Check if you need to send a Self Assessment tax return' and it states I don't need to, but I'm not so sure in this situation.

Thank you

Keep_pedalling

Yes you would, but the whole idea of you being a joint owner is nuts it won’t simplify anything on his death. 

Has he any experience of being a landlord? If not I really hope he has done his homework.

vienly

Thank you for the response, yes he already owns a property and letting it out for the past 20 years and that is in his name on his own.
This will be his second property and he wants my name on there.

Would the property not automatically be passed to me upon his death, and avoid any tax associated with it?

theartfullodger

That will depend on tax laws and regulations when he dies.  Know anybody who can tell you?

And given Brexsh**t mess the country is in expecting taxes to get tougher and more painful 

vienly

Going by today's tax laws I'm hoping it won't deviate that much, hoping he will be around for at least another 30 years , but true, I assume tax laws will have changed by then.

vienly

Ok I think I found the answer, I guess it makes no difference:
From the Gov.uk website:

Joint tenants

You automatically inherit anything you owned as ‘joint tenants’.

You may have to pay Inheritance Tax if the whole of the deceased’s estate (all their money, property and possessions) is worth more than the Inheritance Tax threshold of £325,000 and the deceased’s estate does not pay.

Keep_pedalling

vienly said:

Thank you for the response, yes he already owns a property and letting it out for the past 20 years and that is in his name on his own.
This will be his second property and he wants my name on there.

Would the property not automatically be passed to me upon his death, and avoid any tax associated with it?

If you hold as joint tenants yes, but it will not avoid needing to do probate as he owns other properties that will need it. If he is the only one receiving rent then he will be the sole beneficiary owner, so 100% will be subject to IHT, and in addition you may suffer a double tax whammy as you will be subject to CGT on sale of the property, something that would not happen if he simply leaves it to you in his will. 

If he his net worth takes him into IHT territory then piling all his money into property does not make IHT planning very easy. 

vienly

Keep_pedalling said:

vienly said:

Thank you for the response, yes he already owns a property and letting it out for the past 20 years and that is in his name on his own.
This will be his second property and he wants my name on there.

Would the property not automatically be passed to me upon his death, and avoid any tax associated with it?

If you hold as joint tenants yes, but it will not avoid needing to do probate as he owns other properties that will need it. If he is the only one receiving rent then he will be the sole beneficiary owner, so 100% will be subject to IHT, and in addition you may suffer a double tax whammy as you will be subject to CGT on sale of the property, something that would not happen if he simply leaves it to you in his will. 

If he his net worth takes him into IHT territory then piling all his money into property does not make IHT planning very easy. 

Thank you

sheramber

If you hold it as joint tenancy then HMRC will consider the rental income is received 50/50.

For any other split  you need to be tenants in common with unequal shares. 

In that case your father's share would not automatically transfer to you on his death.