Transferring interest in property to spouse and rental income via Form 17 and Declaration of Trust
I have a client who owned his own house via a mortgage before his then partner moved in with him. They married, still live there and are thinking of moving house and renting the old one out.
From what I understand, the hubby could complete a declaration of trust now to give his new wife benefical ownership of a ratio of say 70:30. By doing this, and then submitting Form 17, the rental income would be treated as being split in that ratio and the couple benefit from two sets of letting relief, PPR exemption and CGT personal allowance when the property is sold.
I have read somewhere however that the couple have to be tenants in common (joint legal title no?) before altering ownership by a declaration of trust, for the Form 17 election to be effective under I think S282B ICTA 1988. Is this correct, or will the declaration of trust do the job without bothering the mortgage company?
Or is there another way of the client achieving two sets of CGT exemptions and splitting rental income without the legal shenanigans that gainfully employ solicitors that I am forgetting?
I've been going round in circles with this one. Sorry, and thanks for any help!