Declaration of trust to someone not on deeds

subcapsular

Hi

my situation is I own a property with a small residential mortgage. 

I have since purchased a new main residence (paying the additional stamp duty).

I would like to rent out my old home once my fix rate is up and remortgage this as a buy to let. The mortgage amount is smalll less then 15% of the property value.

i am a higher rate tax earner and as this property is a lot further away from me i want to give the responsibility of managing the property/rent repairs etc to my father who loves more locally.

if i set up a declaration of trust is he able to receive the rental income?. The rent will be fairly modest but i don't need or want the rent as i will be paying circa 45% tax on the rental income 

my father is retired and I’m happy to take the rental income as repayment for managing the property paying any voids council tax maintenance etc.

is this a possibility even though he’s not names on the deeds?

many thanks

Keep_pedalling

I don’t think it possible, and frankly if you don’t need the income, why have all the responsability and aggro of being a landlord (or lumbering your father with it) ? Selling it means you can also reclaim the additional SDLT.

Hoenir

A Declaration of Trust would have nothing to do with the letting the property and taxation of the income. 

silvercar

Does your father want this? Check as he may not want the responsibility.

If he’s happy to do it, then he could charge you a managing fee equal to the rental profit. 

subcapsular

silvercar said:

Does your father want this? Check as he may not want the responsibility.

If he’s happy to do it, then he could charge you a managing fee equal to the rental profit. 

Would this be tax deductible?

subcapsular

Keep_pedalling said:

I don’t think it possible, and frankly if you don’t need the income, why have all the responsability and aggro of being a landlord (or lumbering your father with it) ? Selling it means you can also reclaim the additional SDLT.

I want to hold on to the property as a long term investment/retirement channel and my father is a landlord himself he runs and rents numerous other properties so is experienced in the field 

mybestattempt

As the sole owner of the property you are taxable on the rental income because you are the person entitled to that income.

There is anti avoidance legislation which is in place to prevent income being diverted to another person to obtain a tax advantage:

https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem4015

mybestattempt

subcapsular said:

silvercar said:

Does your father want this? Check as he may not want the responsibility.

If he’s happy to do it, then he could charge you a managing fee equal to the rental profit. 

Would this be tax deductible?

If you claimed you employed your father to manage the property you would need to demonstrate to HMRC that paying your father an amount equal to the rental profit is a proper commercial reward for the work done:

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2210

If you claimed your father was managing the property on self employed basis it would not be deductible as the payment would not be wholly and exclusively for the purpose of your property business, the purpose would be to avoid paying tax:

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2010

subcapsular

Can this be done even if the property is not in a limited business 

mybestattempt

subcapsular said:

Can this be done even if the property is not in a limited business 

I'm not sure what you are asking about, as far as I was aware you would be letting the property as it's owner.

Nothing you said suggested you would be transferring ownership of the property to a limited company.

Hoenir

subcapsular said:

Keep_pedalling said:

I don’t think it possible, and frankly if you don’t need the income, why have all the responsability and aggro of being a landlord (or lumbering your father with it) ? Selling it means you can also reclaim the additional SDLT.

I want to hold on to the property as a long term investment/retirement channel and my father is a landlord himself he runs and rents numerous other properties so is experienced in the field 

Decisions are best made from a personal tax planning perspective rather than it might be the best thing to do because it's been highly successful in the recent past.