Jointly owned property

Jointly owned property

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2 friends A & B jointly own a property 50:50. There is NO business partnership involved

As per HMRC PIM 1013 they decide to split the income 100% to A and 0% to B; A actually receives 100% of the income.

2 questions

1. Once this decision is made can they change the % in subsequent years?

2. When they come to sell the property is the capital gain split according to the original 50:50 or according to the income sharing % ie 100:0

Many thanks

Clive

Replies (2)

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By Duhamel
24th Feb 2015 13:52

PIM1030
My interpretation is that joint owners can agree to divide the profits in a different manner to the capital split. This can be changed in subsequent years, but changing it every year seems aggressive.

To answer your questions:

1. Yes
2. They must continue with the original capital split, unless one has gifted part of ther property to the other.

Obviously, the situation is more complicated for spouses.

Thanks (1)
Jennifer Adams
By Jennifer Adams
24th Feb 2015 14:35

Joint owners non married agree between themselves..

owners who are not married can agree between themselves how the income is to be split and the income tax will obviously follow that rent - 100% to A in this case.

The rental income must actually go to A.

CGT follows actual ownership so on the assumption that the property is owned jointly rather than as tenants in common the gain is apportioned equally to each.

You can change the percentage year on year.

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