Transfer of property to spouse

Transfer of property to spouse

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I have clients (H&W, in there 60s) who own a Rental property jointly (not sure if Joint tenancy or tenants in common).

He is a Basic Rate Taxpayer.

She has no income other than a small pension and hence does not use all her personal allowances.

I was thinking of suggesting that the property be transferred to the wife, with  view to using up her personal allowances with the rental income.

There is no mortgage on the property.

What issues would there be with this, if any?

Not that I think they will, but if they were to split up in the future would a 99/1% split be any better than a 100/0% split?

Thanks in advance

Replies (5)

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By anon2000
27th Oct 2014 12:44

Anyone?

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By TickTock
27th Oct 2014 12:49

I have just done this with clients who are in exactly the same position. Taxwise it makes much more sense.  The fact that there is no mortgage makes the change of (beneficial) ownership easier.

They have used a Deed of Trust to change the shares to 99/1.

The solicitor did the 99/1 rather than 100/0 as I suggested - I don't know why but it gives pretty much the same result and the clients are happy so ....

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By Paul Soper
27th Oct 2014 12:51

Two things

Provided that the transfer is genuine there is no reason why this should not save tax as intended but if it is not genuine it could be subject to challenge.  If they are under a joint tenancy you would need a complete transfer otherwise it would still be taxed on a 5050 basis, if tenants in common a declaration of trust MIGHT suffice.

Remember though, from next April she will be able to transfer 10% of her allowance to him which might solve the problem anyway without any legal expense.

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By CrowtherP
28th Oct 2014 14:08

Form 17 needed - if 99 to 1 ratio is used

see Form 17 - but what else posting in Aweb in September  https://www.accountingweb.co.uk/anyanswers/question/form-17-what-else

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By Paul Soper
28th Oct 2014 23:39

COYW!

Hi CrowtherP - at the game tonight? [h7-v-174]

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