Way to assess rental income

Unmarried couple rentals

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Hi to All!

Would anyone mind pointing me in the direction of the relevant legislation, or give an opinion please?  I've not had to deal with this particular situation before!

Mr Client owns house, then meets Miss future wife, who also owns house.  They move into a new house together, and rent out their properties.  OK it sounded simple enough!

I am now looking at a mortgage statement in both names, on what was Mr's house. The loan is advanced 3 months after rental has started, which presumably means it had Mr's sole ownership for the first 3 months of renting. 

They haven't presented a mortgage statement for Miss's property, so I have asked whether this is mortgage free, and questioned whose name the deed is in - and what date it was converted to joint names, if applicable.

So I have two questions to look into...

a) are the rents assessible on the basis of ownership (as no election will be in place)

b) is there any CGT implication to consider on either property, if they were transferred while being used as rentals instead of PPR?

Thanks in advance :O)

 

 

 

 

 

 

 

Replies (5)

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By Matrix
21st Jan 2017 14:37

I wouldn't make any assumptions, I would find out the facts. Yes split the rental income per ownership once you know this and advise if a different split would be beneficial prospectively. No CGT if they were already married when the transfers took place.

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By Wanderer
21st Jan 2017 15:51

Establish the facts.

Regarding b) based on what you have told us so far & making some assumptions they could have seriously messed up & may incur much higher CGT on the final sale of Mr X's former PPR when they come to sell it.

Get the whole story now so you can advise them properly.

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By Portia Nina Levin
21st Jan 2017 16:23

Once you have all the facts you might consider passing this to an accountant who can advise your clients properly.

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By bernard michael
22nd Jan 2017 11:33

Yes & yes

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By FoxAccountancyServices
27th Jan 2017 11:11

Hi all, sorry for the delayed thanks for your answers!

I've got my head back into the legislation, and refreshed my understanding of it all - its been a while since I've tackled such a problem as this, and most of it has not changed.

Matrix and Bernard - thanks for confirming the split, I wasn't sure if any new rules has been brought in for non married couples, given the way society is changing! Wishful thinking perhaps!

It turned out to be an interesting job, once I managed to pry all the information out of the client! They weren't married, there was an ex wife, a dec of trust, one property was considered non PPR when half was transferred, and then PPR relief inc 18 month deemed occupation wiped it all out anyway!

Wanderer - He didn't tell me anything about all this until a week ago!! Don't you just love 'em! I have told him to come to me before the event in future, so we can plan properly.

Its all good fun and keeps the day interesting :OP

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