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Beneficial ownership of rental property

what is needed?

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Hi all

I know this is partly a legal question but need a steer before I steer my client...

Mum and two (adult) children have inherited a property from mum's deceased parents, owenership is 33% each but as mum is retired, kids want mum to receive the rental income (to supplement her pension).  Would a declaration of Trust achieve this? - or something else? and would anything need to be sent to HMRC - given a Form 17 isn't going to be completed/submitted.

Any guidance/info would be much appreciated.

Thanks in advance.

 

 

Replies (8)

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By Tax Dragon
13th Feb 2020 14:02

lja20 wrote:

I know this is partly[?!] a legal question but need a steer before I steer my client...

Solicitors?

Perhaps (depending on circs) the one that dealt with mum's parents' estates. Might (depending on circs) be best done via a deed of variation of the Will.

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By The Dullard
13th Feb 2020 14:06

Paid for professional advice?

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By Accountant A
13th Feb 2020 15:31

If you type "Beneficial ownership of rental property" into Google, you get 8.95 million hits.

The ones immediately below the first (sponsored) link, are various ones from this site.

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David Winch
By David Winch
13th Feb 2020 17:43

If the kids want their mother to own the property (and not them) - which is implied in your question - they should first talk to the solicitor dealing with the estate.
David

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Replying to davidwinch:
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By lja20
14th Feb 2020 12:20

Thanks David, apologies my query probably wasn't clear, the underlying ownership isn't going to change, its just where the rental profit will end up. For future CGT purposes, it will follow ownership, It was the 'paper-trail' I wanted to clarify, given Form 17 doesn't apply in this case. I am concluding that they need to document the income split, and retain for their records, should HMRC enquire.

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By jcace
13th Feb 2020 20:56

You might find some interesting reading at PIM 1030:
"Where there is no partnership, the share of any profit or loss arising from jointly owned property will normally be the same as the share owned in the property being let. But joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property. The share for tax purposes must be the same as the share actually agreed."

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Replying to jcace:
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By lja20
14th Feb 2020 12:17

Thanks, I had been looking at the HMRC guidance but I'm not clear what 'audit trail' is required to support the action - ie would a simply letter suffice or does it need anything more structured, and it would seem, nothing is notified to HMRC.
NB - I didn't make it clear in my question, but it is only the income share split, I am querying, the underlying ownership remains ie 1/3 each, and will be in place for any future CGT treatment.

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Replying to jcace:
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By The Dullard
14th Feb 2020 12:46

That guidance precedes and hasn't been updated for Chapter 5A of Part 13 of ITA 2007 introduced by FA 2009, which doesn't share its opinion.

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