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Rental query

Owen2003
Owen2003 Posts: 26 Forumite
First Anniversary First Post Combo Breaker
in House buying, renting & selling
I own a rental property and am in a position to buy a second.

What I'm hoping to do is enable my wife to quit her job and for her to become the landlady for both properties (which would hopefully save me/us approx. 2k in tax p.a.)

In order to do this would I have to transfer my first rental property to my wife (my old house which is solely in my name) and buy the new rental property in her name only?
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Comments

  • SmashedAvacado
    SmashedAvacado Posts: 1,262 Forumite
    First Post First Anniversary
    On the face of it, yes. Rental income follows ownership from a tax perspective.
  • G_M
    G_M Posts: 51,977 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Put Title in joint names and own as Tenants In Common.

    You own 1% (and pay tax on 1% of rent).
    She owns 99%.

    Pray she does not divorce you and run off with 99%..... :rotfl:
  • Owen2003
    Owen2003 Posts: 26 Forumite
    First Anniversary First Post Combo Breaker
    SmashedAvacado wrote: »
    On the face of it, yes. Rental income follows ownership from a tax perspective.

    Cheers - when transferring my old house to her name I take it I don't have to pay stamp duty as it's not a sale just a transfer of ownership between husband and wife????
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    Name Dropper First Post Photogenic First Anniversary
    Could this potentially have some CGT implications down the line as you'll be giving away some PRR?
  • Owen2003
    Owen2003 Posts: 26 Forumite
    First Anniversary First Post Combo Breaker
    Pixie5740 wrote: »
    Could this potentially have some CGT implications down the line as you'll be giving away some PRR?

    CGT = Capital gains tax I presume?

    Excuse my ignorance what is PRR??
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    Combo Breaker First Post
    Owen2003 wrote: »
    Cheers - when transferring my old house to her name I take it I don't have to pay stamp duty as it's not a sale just a transfer of ownership between husband and wife????
    do not transfer it to her as 100%, you will lose your PRR which will greatly impact the final CGT

    make it TIC, with you having a notional share (upon which you will pay income tax by the sounds of it, but that will be a minimal sum if done correctly

    as for SDLT, it depends if there is still a mortgage outstanding, if there is then she will need to be added to it and you may have to pay SDLT depending on the size of mortgage
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    Combo Breaker First Post
    Owen2003 wrote: »
    CGT = Capital gains tax I presume?

    Excuse my ignorance what is PRR??
    Private Residence Relief - the thing that makes your main home exempt from CGT whilst you live in it as owner. Cease living there and you become liable. Not lived in it whilst an owner and you don't get PRR.

    Cease to be an owner and you lose any historic PRR you had and cannot get it back even if you resume being an owner at a later date

    BTW - you are married, therefore if you share the rental income in any proportion other than 50/50 you will need to send a Form 17 to HMRC otherwise they will tax you as 50/50

    google it....
  • Owen2003
    Owen2003 Posts: 26 Forumite
    First Anniversary First Post Combo Breaker
    00ec25 wrote: »
    Private Residence Relief - the thing that makes your main home exempt from CGT whilst you live in it as owner. Cease living there and you become liable. Not lived in it whilst an owner and you don't get PRR.

    Cease to be an owner and you lose any historic PRR you had and cannot get it back even if you resume being an owner at a later date

    BTW - you are married, therefore if you share the rental income in any proportion other than 50/50 you will need to send a Form 17 to HMRC otherwise they will tax you as 50/50

    google it....

    Many thanks for the advice - I lived in it for 12 years but have let it out for the last 3 years.........have I lost my PRR then? (and it's mortgage free BTW)
  • chalky_white_2
    chalky_white_2 Posts: 57 Forumite
    First Anniversary First Post
    If there is no mortgage you can 'gift' the Property into your joint names. This will incur no SDLT and minimal Land Registry fees.

    A Declaration of Trust can be set up to ascertain rental income for income tax purposes.

    Capital Gains Tax may be payable as it can be deemed a 'disposal' of an asset when you gift an asset. HMRC can view the disposal as at the value of the Property on the day of disposal.
  • 00ec25
    00ec25 Posts: 9,123 Forumite
    Combo Breaker First Post
    chalky_white wrote: »
    If there is no mortgage you can 'gift' the Property into your joint names. This will incur no SDLT and minimal Land Registry fees. agreed

    A Declaration of Trust can be set up to ascertain rental income for income tax purposes. they are married

    Capital Gains Tax may be payable as it can be deemed a 'disposal' of an asset when you gift an asset. HMRC can view the disposal as at the value of the Property on the day of disposal. they are married
    you appear to have missed the point that they are married. Whilst a DoT is indeed required, it will be ignored unless accompanied by a Form 17

    you appear to have missed the point that they are married, therefore any transfer between themselves is on a no gain, no loss basis, and will not, as you incorrectly state, result in CGT being payable
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