Transferring ownership of property for tax purposes

Swindle56

My brother and I bought a house together over 10 years ago when we were both still single to rent out.

Since then we have both gotten married and both work full time as well and are now each earning over £100k per annum (Inc the rental income). This means we're both stuck in the 60% tax trap as you lose your personal allowance for every £2 earnt over 100k you lose £1 PA till you reach £125k and it's all gone

My wife is a basic tax payer but we can't take advantage of marriage allowance because I earn too much.

What are the options for transferring the property ownership over to the wives so they can receive the income from the rental in their names rather than ours and continue to lose out to the tax man?

In the short term I'm having to dump extra earnings into the pension to avoid this tax trap but we need the money now to pay for bills etc rather than later in life when we can sell the property.

Any ideas or advice would be much appreciated

Thanks 

Dazed_and_C0nfused

My wife is a basic tax payer but we can't take advantage of marriage allowance because I earn too much.

Even if you were eligible it's highly unlikely that there would be any benefit in it.  You would save £252 and she would pay an extra £252.

You might get more responses on the Cutting Tax board.

I think it's doable but you are giving away a property to avoid some tax.  Not risk free.

ashe

It's a totally wild idea but you could always pay the tax that's due given the state the country is in 

_Penny_Dreadful

ashe said:

It's a totally wild idea but you could always pay the tax that's due given the state the country is in 

“No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores.”

- Lord Clyde during his time as President of the Court of Session. 

_Penny_Dreadful

Swindle56 said:

My brother and I bought a house together over 10 years ago when we were both still single to rent out.

Since then we have both gotten married and both work full time as well and are now each earning over £100k per annum (Inc the rental income). This means we're both stuck in the 60% tax trap as you lose your personal allowance for every £2 earnt over 100k you lose £1 PA till you reach £125k and it's all gone

My wife is a basic tax payer but we can't take advantage of marriage allowance because I earn too much.

What are the options for transferring the property ownership over to the wives so they can receive the income from the rental in their names rather than ours and continue to lose out to the tax man?

In the short term I'm having to dump extra earnings into the pension to avoid this tax trap but we need the money now to pay for bills etc rather than later in life when we can sell the property.

Any ideas or advice would be much appreciated

Thanks 

You don’t mention if the rental property is mortgaged. 

I think @Dazed_and_C0nfused is right, this is really a question for the Cutting Tax board. It could well be that there is no advantage to keeping hold of the rental property full stop but then you start veering into CGT territory. 

silvercar

_Penny_Dreadful said:

Swindle56 said:

My brother and I bought a house together over 10 years ago when we were both still single to rent out.

Since then we have both gotten married and both work full time as well and are now each earning over £100k per annum (Inc the rental income). This means we're both stuck in the 60% tax trap as you lose your personal allowance for every £2 earnt over 100k you lose £1 PA till you reach £125k and it's all gone

My wife is a basic tax payer but we can't take advantage of marriage allowance because I earn too much.

What are the options for transferring the property ownership over to the wives so they can receive the income from the rental in their names rather than ours and continue to lose out to the tax man?

In the short term I'm having to dump extra earnings into the pension to avoid this tax trap but we need the money now to pay for bills etc rather than later in life when we can sell the property.

Any ideas or advice would be much appreciated

Thanks 

You don’t mention if the rental property is mortgaged. 

I think @Dazed_and_C0nfused is right, this is really a question for the Cutting Tax board. It could well be that there is no advantage to keeping hold of the rental property full stop but then you start veering into CGT territory. 

No CGT on transfer between spouses.

I'll ask the forum team to move this to the tax board.

Swindle56

_Penny_Dreadful said:

Swindle56 said:

My brother and I bought a house together over 10 years ago when we were both still single to rent out.

Since then we have both gotten married and both work full time as well and are now each earning over £100k per annum (Inc the rental income). This means we're both stuck in the 60% tax trap as you lose your personal allowance for every £2 earnt over 100k you lose £1 PA till you reach £125k and it's all gone

My wife is a basic tax payer but we can't take advantage of marriage allowance because I earn too much.

What are the options for transferring the property ownership over to the wives so they can receive the income from the rental in their names rather than ours and continue to lose out to the tax man?

In the short term I'm having to dump extra earnings into the pension to avoid this tax trap but we need the money now to pay for bills etc rather than later in life when we can sell the property.

Any ideas or advice would be much appreciated

Thanks 

You don’t mention if the rental property is mortgaged. 

I think @Dazed_and_C0nfused is right, this is really a question for the Cutting Tax board. It could well be that there is no advantage to keeping hold of the rental property full stop but then you start veering into CGT territory. 

It's not.. owned outright

Jeremy535897

There is nothing from a tax point of view stopping you giving your share of a debt free property to your wife (so long as you live with her). If you do that, she will be liable for any income tax on the rental income, and capital gains tax on its sale. She will acquire the property for tax purposes at the amount you paid for it.

Swindle56

Jeremy535897 said:

There is nothing from a tax point of view stopping you giving your share of a debt free property to your wife (so long as you live with her). If you do that, she will be liable for any income tax on the rental income, and capital gains tax on its sale. She will acquire the property for tax purposes at the amount you paid for it.

This sounds perfect what do I need to do to achieve it?

Thanks!

[Deleted User]

Swindle56 said:

Jeremy535897 said:

There is nothing from a tax point of view stopping you giving your share of a debt free property to your wife (so long as you live with her). If you do that, she will be liable for any income tax on the rental income, and capital gains tax on its sale. She will acquire the property for tax purposes at the amount you paid for it.

This sounds perfect what do I need to do to achieve it?

Thanks!

Nothing very much really - entirely a matter for the solicitor. 

Dazed_and_C0nfused

But given you will no longer own the property and it will be your wife's to do what she wishes with it you should probably keep in her good books as well 😳