Rental income & deed of trust

Rental income & deed of trust

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H&W client own 5 BTL properties. All are held as tenants in common 50:50. Husband earns over 100k and wife does not work. Tax liabilities are obvioulsy increasing for the husband. The question is what are readers doing in this common situtaion and would a deed of trust work in terms of transferring the beneficial entitlement of the income entirely to the wife, alongside the filing of form 17?

There are mortgages on all properties and the value of the mortgages is just over £500k. Given this, is there an SDLT issue even if there is no actual consideration i.e. would there be an SDLT charge on £250k mortgage value as a result of the DOT and form 17?

Would the DOT need to be revoked before selling any of the properties or would this not matter as far as CGT is concerned as the legal interest has not changed?

Thanks

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By Accountant A
06th Feb 2020 17:52

If you Google "Rental income & deed of trust" you get 16.7 million hits included numerous ones from this site.

Am I the only one on this site who uses Google?

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Scooby
By gainsborough
07th Feb 2020 11:00

….or read Form 17 instructions....you have to actually own the property in unequal shares for Form 17 to apply, so this will impact the eventual sale by H&W. "You cannot choose to have income taxed on an unequal basis because you think it would be to your advantage".

Yes, there would also be stamp duty implications if the wife assumed responsibility for the whole mortgage.

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By pauljohnston
07th Feb 2020 12:43

This is a complex situtation but I can advise you . The husband can give any share of a property to his wife CGT free. This can be done by a declaration of trust but if there are mortgages are there any conditions preventing this. Consider also SDLT . Once the Deed has ben completed Form 17 needs to be conpleted.

One question for the other readers is if a couple who unequally own a property marry is a Form 17 required. I would have thought so butit is not clear

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Replying to pauljohnston:
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By Tax Dragon
07th Feb 2020 14:38

pauljohnston wrote:

I would have thought so butit is not clear

Wherein lies the unclarity?

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