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    • Owen2003
    • By Owen2003 12th Sep 18, 10:14 AM
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    Owen2003
    Rental query
    • #1
    • 12th Sep 18, 10:14 AM
    Rental query 12th Sep 18 at 10:14 AM
    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?
Page 1
    • SmashedAvacado
    • By SmashedAvacado 12th Sep 18, 10:16 AM
    • 279 Posts
    • 334 Thanks
    SmashedAvacado
    • #2
    • 12th Sep 18, 10:16 AM
    • #2
    • 12th Sep 18, 10:16 AM
    On the face of it, yes. Rental income follows ownership from a tax perspective.
    • G_M
    • By G_M 12th Sep 18, 10:30 AM
    • 45,321 Posts
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    G_M
    • #3
    • 12th Sep 18, 10:30 AM
    • #3
    • 12th Sep 18, 10:30 AM
    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%.....
    • Owen2003
    • By Owen2003 12th Sep 18, 9:59 PM
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    Owen2003
    • #4
    • 12th Sep 18, 9:59 PM
    • #4
    • 12th Sep 18, 9:59 PM
    On the face of it, yes. Rental income follows ownership from a tax perspective.
    Originally posted by SmashedAvacado
    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
    • By Pixie5740 12th Sep 18, 10:10 PM
    • 12,918 Posts
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    Pixie5740
    • #5
    • 12th Sep 18, 10:10 PM
    • #5
    • 12th Sep 18, 10:10 PM
    Could this potentially have some CGT implications down the line as you'll be giving away some PRR?
    • Owen2003
    • By Owen2003 12th Sep 18, 10:26 PM
    • 10 Posts
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    Owen2003
    • #6
    • 12th Sep 18, 10:26 PM
    • #6
    • 12th Sep 18, 10:26 PM
    Could this potentially have some CGT implications down the line as you'll be giving away some PRR?
    Originally posted by Pixie5740
    CGT = Capital gains tax I presume?

    Excuse my ignorance what is PRR??
    • 00ec25
    • By 00ec25 12th Sep 18, 10:26 PM
    • 6,967 Posts
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    00ec25
    • #7
    • 12th Sep 18, 10:26 PM
    • #7
    • 12th Sep 18, 10:26 PM
    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????
    Originally posted by Owen2003
    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
    • By 00ec25 12th Sep 18, 10:31 PM
    • 6,967 Posts
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    00ec25
    • #8
    • 12th Sep 18, 10:31 PM
    • #8
    • 12th Sep 18, 10:31 PM
    CGT = Capital gains tax I presume?

    Excuse my ignorance what is PRR??
    Originally posted by Owen2003
    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
    • By Owen2003 14th Sep 18, 10:48 AM
    • 10 Posts
    • 0 Thanks
    Owen2003
    • #9
    • 14th Sep 18, 10:48 AM
    • #9
    • 14th Sep 18, 10:48 AM
    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....
    Originally posted by 00ec25
    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
    • By chalky_white 14th Sep 18, 12:52 PM
    • 11 Posts
    • 7 Thanks
    chalky_white
    It will all work out...
    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
    • By 00ec25 14th Sep 18, 6:12 PM
    • 6,967 Posts
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    00ec25
    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
    Originally posted by chalky_white
    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
    • 00ec25
    • By 00ec25 14th Sep 18, 6:24 PM
    • 6,967 Posts
    • 6,650 Thanks
    00ec25
    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)
    Originally posted by Owen2003
    no you retain your PRR because you continue to be its owner

    you only lose your PRR if you cease to be an owner, as I mentioned in the post you quote

    the key point when married and adding a spouse to ownership of a property is that you must carefully review who has a claim to PRR and who does not, as it should be a factor in your decision

    to claim PRR you must have lived in the property as your main home whilst also an owner. A spouse cannot inherit a claim to PRR from their other half, the spouse must have lived in the property themselves whilst owning it as their main residence.

    once an owner moves out, and for example, the property is let, then the owner retains their claim to PRR and also can claim letting relief. But if there is no claim to PRR then you cannot claim LR. Hence it is vital to ensure that a spouse taking on ownership does not "cost" the other person a large amount of extra CGT because the spouse cannot claim PRR and LR in their own right. I am sure you are smart enough to see that there will be a break point where the real values mean a few of income tax saved on a few years rent is nothing if x% of the property's gain is subject to unrelieved CGT because it is owned by a spouse with no claim.


    read this to see the mechanics of CGT, PRR, and LR
    https://forums.moneysavingexpert.com/showpost.php?p=73621764&postcount=2
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