Jointly owed property with daughter

Jointly owed property with daughter

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Client(Mother) wishes to purchase property jointly with daughter. Daughter is a higher rate taxpayer, mother not a taxpayer.

Therefore for tax purposes is this just a case of entering all the rental income on the mothers tax return, or is there some other

procedure involved?

Also if the mother dies, does her share of this property automatically go to the daughter, or does it get accumulated with the

mother's overall estate?  In particular does the mother have to specify in her will that this property passes to the daughter?

Replies (3)

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By 0705736
14th May 2014 16:26

My feeling is that if the property is owned jointly then both parties are entitled to some of the income and each must declare her share.  If it's joint tenancy (rather than tenancy in common) then the shares of income will be 50/50 and the property will pass automatically to the survivor when one dies.  The value of the share would have to be included in the estate however for IHT.

Form 17 doesn't apply (to declare the respective entitlements to income) as that only applies to husband and wife.  

So the true beneficial interests will determine who is entitled to what income.

You might use a declaration of trust to change things but that would simply result in the ownership being a tenancy in common I think - i.e. it would change the entitlements and the way in which the property passes on death.

I don't claim to be an expert but I hope that helps.

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By King_Maker
14th May 2014 16:44

Mother & daughter can share

Mother & daughter can share the rental profit however they choose.

It does not have to be in the same ratio to their capital share.

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By duncanedwards
18th May 2014 16:27

HMRC View

http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm

"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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