High rate tax payer and rental income

dhrubo

 

Im an employed high-rate taxpayer with 1 buy-2-let and 1 residential mortgage. Both properties are under mine and my wife's name who is a basic rate taxpayer. 

Financially I am reliant on my rental income to help with the residential property's high mortgage and additional debts accumulated from an extension project on my residential property

Both mortgages have decent interest rates as it was remortgaged a few years so not worth remortgaging. 

Every year income tax obligations keeps increasing on my rental income (40%) and with so many outgoings and 2 dependents, things are a stretch. I'm also wondering if it's worth selling the rental or transferring the rental to my wife's name.  

Any advice on this would be appreciated. 

 

El_Torro

How much better off will you be if you sell your Buy To Let property? Sure, you'll get a lump sum, though the rental income will cease. Also how much of a lump sum will you get after paying Capital Gains Tax, estate agent fees, etc..?

I believe that transferring the property to your wife so that the rental income is all hers is an option. So this will decrease your family's Income Tax bill at least.

If things are a stretch now it's worth considering how things will be when your mortgage fixed rate ends and you have to remortgage, possibly at a higher rate than you're paying now.

sheramber

You can change the ownership to your wif only

Or

You can sign a Declaration of Trust to allocate a higher percentage of the beneficial interest in the property to your wife.

Post on the cutting tax forum for further advice.

propertyrental

Transfer ownersip of the BTL from Joint Tenants to Tenants in Common and created a Deed of Trust specifying that you own 1% (so pay higher rate income tax on 1% of the rental income) and she owns 99% (and pays the lower rate tax on 99% of the rent)

https://www.gov.uk/joint-property-ownership

https://www.nationalpropertybuyers.co.uk/blog/conveyancing/joint-tenants-or-tenants-in-common-explained/