Webb Posted March 11, 2008 Report Share Posted March 11, 2008 My wife and I have a rented property under joint ownership, legally defined on deeds as "joint tenants in common" (for inheritance purposes). Because of the ownership arrangement, does our taxable income from the property have to be declared on our tax returns in equal halves, or can we use some other self-determined proportion e.g. one partner 75% the other 25%? This would make better use of personal tax allowances against our other earnings which are different. One for the tax experts, please! Link to comment Share on other sites More sharing options...
Trenners Posted March 12, 2008 Report Share Posted March 12, 2008 Hi Webb, You need to create a "deed of trust" between yourself and your wife - a solicitor can do this for you - that apportions the property (and any associated debt) in the way that you wish to own the income and expenditure. eg: 75% / 25%. If you do not create a deed of trust then the property is assumed to be 50% / 50% ownership. Anything to add Plym77 ? Mark Link to comment Share on other sites More sharing options...
plym77 Posted March 12, 2008 Report Share Posted March 12, 2008 Hi Both If you own a property jointly then it is 50:50 for capital and income. If you want a different split then you will need to talk to a solicitor about Tenants in Common ownership and Declarations of Trust For clarification, any split in ownership between spouses (ie. 99:1, 75:25 etc) will equal a 50:50 split of income on the tax return, unless you prepare the appropriate tax Form 17 to back up the capital ownership - available for download : http://www.hmrc.gov.uk/forms/form17.pdf at which point you would follow the capital split Once you have done a form 17, you will follow the capital split going forward. The only way to get back to the 50:50 split would be to amend the ownership between you again, at which point it would automatically be 50:50 until form 17 was submitted to follow the new capital ownership..... and so on and so forth Your only choices are 50:50 or following the capital split - you cannot for example have a 40:60 ownership and a 75:25 income split. Hope this helps Regards Sherena Link to comment Share on other sites More sharing options...
Webb Posted March 12, 2008 Author Report Share Posted March 12, 2008 Dear Sherena, and Mark, Many thanks for your most helpful advice. The question was raised in discussion with my IFA. I somehow didn't think it was that easy to re-apportion income advantageously between partners without HMRC getting involved !! Kind regards, Webb Link to comment Share on other sites More sharing options...
plym77 Posted March 12, 2008 Report Share Posted March 12, 2008 Hi Webb Agreed, but it is relatively easy to achieve just the same and quite an effective planning tool for income splitting with low capital impact Sherena Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.