Renting main property and downsizing to a smaller home

Bookworm225

sheramber said:

bellabella said:

As the above says we are looking to rent out our main property which is in my name only (inherited) and are now in the position to downsize to a smaller more economical property to be purchased outright in husbands name only . Now as i have no pension the funds from the rental would become my pension on paper with fees we would be looking at an income of just over 2K per month (London) other than fees and insurances what should i be doing and asking letting agents when they come to look at the property and is there anything i should seriously consider before embarking on this journey. Thanks In advance

iYour  husband will be taxed on the  rental income.

ownership and right to income of the rental is in her name only.
Husband not liable for income tax on income he is not entitled to receive.

You have confused the two properties 

FlorayG

OP I would strongly suggest you join the NRLA right now. The amount of information they can give you will be well worth the year's membership fee even if it makes you decide NOT to let your house. There are all sorts of rules and regulations you have to adhere to and it's not easy to remove a tenant who doesn't want to leave so you need to be armed with all the information before you take the plunge (not least because the paperwork in place on the day the tenant moves in is CRUCIAL to being able to get then out again)
Don't forget you have to pay tax on the rent as well

bellabella

Thank you all for your info and i will join NRLA as a matter of course . There is more at play here but i cannot put this on an open forum at present it just one of many avenues we need to explore. I knew it would be a difficult road to navigate so the advice here has been gratefully received 

saajan_12

Few points to consider

For stamp duty, you're considered a unit so regardless of who's name is on what, the new property will incur higher rate SDLT because its an additional property for you (as a unit). 

For CGT, if you solely own the rented property and eventually sell it, you'll incur CGT alone. The % of time you lived there is deducted, and you get an allowance of £3k (on current rules), after which you pay you'll still pay tax at the 18/24% rate. Since husband doesn't own it, you can't use his allowance (though if he is a higher rate tax payer then it may be better in your name alone)

For income tax, the rental income less expenses is taxable at your normal rate, so 0% upto your personal allowance and then 20% and 40%. Expenses can include agent fees, repair costs, insurance costs, etc so keep records of that.