Joint ownership house - tax

Nedved11

Nedved11

Nedved11

Soldato
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Any property heads here?

Quick question. Going to be buying a house for purpose of rental income with the other half (not married). The house will be a 'tennants in common' ownership. For the purpose of tax returns etc... What kind of paperwork would you have to provide to show percentage ownership to HMRC? Or do you need to?

Does HMRC assume it's a 50/50 split and we take a share of the tax bill?

Other half will be on maternity soon so income will be reduced so want to be a bit more tax efficient as I'll be paying the higher rate tax bill, she's on the basic rate.

Eventually we will get married and things will get complicated with regards to splits as default is 50/50.

Advice would be appreciated. Many thanks.
 
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both declare 50% ownership in property, and actual earnings from rental, so if the property makes you £500/month, then both of you declare £250/month.

HMRC will work out the rest,

just marry her FFS, it will just be easier for the tax man, and you will get the tax breaks that go with it.
 
Soundood said:
both declare 50% ownership in property, and actual earnings from rental, so if the property makes you £500/month, then both of you declare £250/month.

HMRC will work out the rest,

just marry her FFS, it will just be easier for the tax man, and you will get the tax breaks that go with it.
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There are none currently, and if he is a higher rate of taxpayer I am unsure there will ever be any,
 
Soundood said:
both declare 50% ownership in property, and actual earnings from rental, so if the property makes you £500/month, then both of you declare £250/month.

HMRC will work out the rest,

just marry her FFS, it will just be easier for the tax man, and you will get the tax breaks that go with it.
Click to expand...

What tax breaks are there for married couples? Is this Camerons "marriage tax break" that he made some years back?

Quick google yields:

"For marriages before 5 December 2005, the husband’s income is used to work out Married Couple’s Allowance. For marriage and civil partnerships after this date, it’s the income of the highest earner."

So let me get this straight, if you were married before 5th December, its the husbands salary used to determine whether you are eligible for allowance? (not the highest income earner)?

(Sorry for hijack OP - to answer your questions, you can specify the ratio of ownership in the tenants in common document which is drawn up by your solicitor). So for the sake of argument if you are going in 50/50 then its literally 50% of everything (e.g. mortgage, rental, expense claims etc etc).
 
Pretty sure the automatic presumption by HMRC is 50/50 for any joint tenancy / tenancy in common. Significance of this is that you could hold 99% share and wife 1% and for tax purposes the income will still be deemed to be split 50/50 between the pair of you unless you elect otherwise.

However if you completely trust each other etc you can normally change the split. For example if your girlfriend / wife is on maternity and possibly therefore not utilising her personal allowance and basic tax rate bands and you are a higher rate taxpayer then it could be beneficial to elect with HMRC to allocate a higher share to your partner of say 90/10 in her favour.

Doing this can result in tax savings for you as a couple by taxing property income at a lower tax rate.

Of course this means if you split she owns 90% so you need to have full trust. You could however change the split back to 50/50 at a later date or even split it the other way if circumstances changed.
 
Cavallino said:
What tax breaks are there for married couples? Is this Camerons "marriage tax break" that he made some years back?

Quick google yields:

"For marriages before 5 December 2005, the husband’s income is used to work out Married Couple’s Allowance. For marriage and civil partnerships after this date, it’s the income of the highest earner."

So let me get this straight, if you were married before 5th December, its the husbands salary used to determine whether you are eligible for allowance? (not the highest income earner)?

(Sorry for hijack OP - to answer your questions, you can specify the ratio of ownership in the tenants in common document which is drawn up by your solicitor). So for the sake of argument if you are going in 50/50 then its literally 50% of everything (e.g. mortgage, rental, expense claims etc etc).
Click to expand...

You want to look at the Marriage allowance, not the married couples allowances, which only applies if a partner is over 80 years of age.
In which case it does refer to the husband as the higher earner, unsurprisingly enough.

Either way, the Op said he is a high rate taxpayer, so no transfer is possible if you fall into the above £42K bracket. Its only if you are between 11-42K that some transfer is possible if your partner earns below 11K.
 
Thanks for the replies guys. We will go for a 90/10 in her favour I think I do trust her :)

So basically all I do is get the joint ownership sorted and show this to the HMRC who will work out out the tax bill according to my other half tax rate?

I will probably speak to a tax accountant but want to get a good idea beforehand.
 
yes, but very little in the last financial year. I have to declare this year and I'm guessing it doesnt backdate so will pay 40% but next year I should make more (hopefully wont have to pay for new carpets, boiler etc that I had to in order to make it rentable)

I thought being married meant an automatic 50/50
 
let them come, I only own 1 house and work has forced me to live elsewhere where I pay rent, strangely it did just cover my rent for a similar house, now the government wants to take 40%, which leaves me 40% worse off!
 
TBirdUK said:
let them come, I only own 1 house and work has forced me to live elsewhere where I pay rent, strangely it did just cover my rent for a similar house, now the government wants to take 40%, which leaves me 40% worse off!
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No, they only take 40% on extra earnings above the threshold and NI is only 2% so it goes from 32% income tax to 42%...

Soundood said:
just marry her FFS, it will just be easier for the tax man, and you will get the tax breaks that go with it.
Click to expand...

Yeah weddings are cheap after all...
 
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TBirdUK said:
let them come, I only own 1 house and work has forced me to live elsewhere where I pay rent, strangely it did just cover my rent for a similar house, now the government wants to take 40%, which leaves me 40% worse off!
Click to expand...

You know it doesn't work annually, if you have accrued a debt on a mortgage interest payment, that stay son the total, and future income is deducted from it.
You only start paying tax when you have actually made a profit on the overall thing.
This included expenses on repairs and replacements etc.
Talk with an accountant, but to answer your question, to sign it over to a wife will involve a solicitor and will mean a change in your mortgage as both names will need to be listed.
 
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