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Pre marriage property solely owned by husband - can income be given to wife in order to reduce tax?

Pre marriage property solely owned by husband -...

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Husband bought property and lived in as PPR.

Girlfriend moved in and contributed to mortgage but was never owner.

Husband married girlfriend and couple bout a new house together. Husband retained previous property and rented it out.

Husband is a higher rate tax payer, wife is basic rate tax payer.

How can the rental income manipulated in order to make use of the wifes BR allowance and reduce husbands 40% tax bill?
Does ownership of the property have to be transferred? If so is there any penalty to the husband on this?
Can wife recieve part of the rental profit without becoming an owner?

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By eastangliantaxadvisor
17th Oct 2012 19:18

You could split the interest in the property using HMRC form 17

http://www.hmrc.gov.uk/forms/form17.pdf

Note, however, you can only declare the ownership and split the income according to the owensership %. So you would need to trasnfer a % ownership to her, which would be a no gain / noloss trasnfer.

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By lisler
18th Oct 2012 20:25

Why own it jointly?

My understanding is that if the property is not owned jointly then a declaration of trust can be made giving beneficial interest of the rental income to whoever the owner wishes.

There is an interesting article outlining the position in Residential Propery Investor July/August 2012. It is available in the writers website: taxlandlord.com

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