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Joint rental property income

A client has rental income from three properties, all of which are held in joint names with his wife. Is it a legal requirement to make two tax returns with each reflecting 50% of the income and expenditure per tax year, or is it acceptable to return all details on one return only?

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26th Jan 2011 11:57

yes is the answer

Richard

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26th Jan 2011 11:59

.

Can anyone also please help with this question I posted on AccountingWeb which has remained unanswered?

http://www.accountingweb.co.uk/anyanswers/rental-income-husband-wife/474853

Thanks

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26th Jan 2011 12:02

Joint rental income

Thanks........but please clarify.

Yes - it is legally required to make two separate returns or .....yes - it is acceptable to make only one return with all income/expenditure.

 

 

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26th Jan 2011 12:32

Yes

Two individual tax returns. You wach own 1/2 the properties so 1/2 the income - 1/2 the costs - 1/2 the mortgage interest, etc. etc.

In the furture you could consider a Declaration of Trust to alter the apportioned beneficially owned and Form 17 to HMRC, but for now you are tied to 50/50. Regards Peter

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26th Jan 2011 12:34

Split 50:50

Income from jointly owned property must be split equally unless a valid election has previously been made to divide the income in the ratio of the capital contributed.

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26th Jan 2011 12:38

Independent taxation

Unless this is a partnership property business (see PIM 1030), which seems unlikely (and in which case, you would need a partnership tax return as well as separate tax returns for both husband and wife), you must file separate tax returns for both husband and wife disclosing 50% (unless a different split has been declared to HMRC) of the letting income and expenses on each return.

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By ACDWebb
26th Jan 2011 12:53

Erm

Can anyone also please help with this question I posted on AccountingWeb which has remained unanswered?

http://www.accountingweb.co.uk/anyanswers/rental-income-husband-wife/474...

Thanks

Posted by

madhumorjaria

on Wed, 26/01/2011 - 11:59

Your link seems to go nowhere

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26th Jan 2011 13:08

Trying again...

http://www.accountingweb.co.uk/anyanswers/rental-income-husband-wife/474853

 

[Ed's note - link in original post now fixed; the Any Answers system included "thanks" on the end of the  link and sent it into cyberspace]

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By blok
26th Jan 2011 16:27

.

Just picking up on Chris's point.

"Income from jointly owned property must be split equally unless a valid election has previously been made to divide the income in the ratio of the capital contributed".

I was of the impression that capital introduced has got very little to do with a change in the profit sharing arrangements of a married couple.  If both H&W agree and put in writing that the beneficial ownership should be split other than 50:50, then so long as a proper deed is in place to this effect then file form 17 and away you go.

I have also assumed that this sequence of events covers the CG position on any gain also.  maybe someone can confirm?

Also, after the beneficial ownership has been split to say 90:10 does this ownership filter through on divorce proceedings also.  I am unsure given that legal title has not been ammended.  Again maybe someone can confirm.

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26th Jan 2011 17:54

Click on the link below

and scroll down to the piece on joint property.

http://www.rossmartin.co.uk/index.php/tax-guides/543-advisers-update-dec-2010

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26th Jan 2011 18:10

Or start with HMRC's view for free

PIM1030

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By blok
26th Jan 2011 18:36

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Hi Chris,

I have read this before, it just doesn't mention how it affects legal title in the event of dispute.  It doesnt mention the cgt position, however I cant see that being different from the itax position.

 

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26th Jan 2011 20:09

.

 

and scroll down to the piece on joint property.

http://www.rossmartin.co.uk/index.php/tax-guides/543-advisers-update-dec-2010

 

Requires a username & password :-(

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By jane
26th Jan 2011 23:14

joint rental income - share the 'profit'

My husband & I have BTL property and I was investigated re SA as my Accountant explained that 'too many husbands & wives buy the property in joint names and then try to allocate all the income to the wife'. 

 

 

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31st Jan 2011 13:15

Let's read the manual

You will find nigh on all the information you need from the HMRC manual http://www.hmrc.gov.uk/manuals/inmanual/in145+.htm. The crucial thing to bear in mind is that, by all accounts, you only have 60 days after signing Form 17 in which to ensure that it is received by HMRC. So deciding that you'd like to set off more of your joint losses on a BTL property against your spouse's other sole commercial property profits after the event is not going to work! ;-).

In addition, whilst it is not specifically mentioned, there is reference to the issue of divorce/separation and also to CGT in that the 60 day rule has to be strictly adhered to in order to correctly compute any gain and the time-frame within which it occured.

One thing that puzzles me a little is that there is no mention of whether or not Form 17 is required in the event that both parties have signed and had witnessed a Declaration of Trust drawn up by a solicitor since this, in law, has the same effect.

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