My client has let out his old PPR and the income needs putting on his tax return.
The property is a flat and somehow my client (solely) owns the freehold, whilst his wife and he have the leasehold. I'm imagining that the income should be shared between both on their tax returns ( the mortgage is in joint names by the way) but perhaps someone with a bit of legal knowledge could confirm this?
Thanks
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Jointly Owned
Income should be apportioned according to ownership but I see you have a sticky one here with Joint ownership of the leasehold. Joint mortgage does not define ownwership. In the case of dispute HMRC would look to the land registry documents. If your concern is to avoid HR tax on the husband he could always gift 50% to his wife and have the Land Registry documents reflect this.
Ownership and rent
If it follows normal ownership there is a lease granted from the freeholder (landlord) to the leaseholders (tenant). There will be a consideration, ground rent, payable by the leaseholders.
The tenants will have granted a sub lease to the occupier (sub-tenant). The rent payable by the sub-tenant will be chargeable on the tenant. The tenant will be charged to tax on the rent less the ground rent and the interest paid. The landlord will be chargeable on the ground rent.
As above, check the ownership, the rest then falls into place.