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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I own a buy to let property solely in my name. I am a higher

Customer Question

I own a buy to let property solely in my name. I am a higher tax payer. my wife does not work at the moment. can I sign a declaration of trust stating that 90% of the house is hers hence 90% of the rental income is also hers... enabling us to allocate 90% of the rental income in my wife's name who is a non earner at the moment, hence benefiting from her tax allowance and low tax bracket?
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: there is a mortgage on the property in my name as well
JA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.
Submitted: 1 year ago.
Category: UK Tax
Expert:  Tony Tax replied 1 year ago.
Hi. Te default HMRC position for the division of rental income on a property jointly owned by a married couple is 50:50. That is, unless you actually own it in proportions other than 50:50 and you inform HMRC on a form 17. If that is the case, then the rental income can be split in proportions which reflect the actual ownership. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
no as I said the property is solely owned by myself...
the question is can the property still be solely in my name however I sign a declaration of trust to hold the house for her in my name i.e. on sale all the sale proceeds would go to her...
hence any rental income would go to her as a result of that declaration of trust...
Expert:  Tony Tax replied 1 year ago.
you can do that. The simplest thing to do, however, would be to transfer the property into your wife's name using the appropriate form from The Land Registry. Deeds of trust are normally used where there are more than four owners of a property as only four names can be on the title deeds. A deed is mentioned in the notes for form 17 in that it can support a change in the division of rental income. If there is a mortgage on the property, you may be liable to stamp duty on a transfer of beneficial ownership as you can read here.
Customer: replied 1 year ago.
I want to avoid stamp duty which is payable if I transfer the ownership in her name, besides I can't just simply transfer the ownership in her name as I have a mortgage on the property and the mortgage provider will not accept...
that is why I am asking about a declaration of trust, I need to know if I can sign a declaration of trust and then assign all the rental income to my wife and also assign the property to her, i.e. she will also take all the sales proceeds and also pay CGT as well...
Expert:  Tony Tax replied 1 year ago.
Assuming your wife will not be responsible for any of the mortgage and no cash changes hands, then there will be no stamp duty. Given that the declaration of trust effectively transfers ownership to your wife, I'd be surprised in the lender would accept that sort of arrangement.
Customer: replied 1 year ago.
ok so I still don't know what I need to do to get all the rental income to be declared under my wife's name, without having to pay stamp duty... and without having to get consent from the mortgage provider...
Expert:  Tony Tax replied 1 year ago.
To my knowledge, there is no clever method to achieve what you want to achieve because there is a mortgage on the property and your wife has no income to support it. If there was no mortgage, there would be no stamp duty and no lender in the way. A personal guarantee from you would involve other collateral.