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Rental Property Income Split Declaration of trust

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Good Evening, 

My client has a rental property he owns 100% and he now wants the income split to be 1% him and 99% his partner. I have seen from various other threads that there are certain types of trusts for this and the previous posts are somewhat contradictory. 

Would a simple declaration of trust suffice for this type of arrangement per https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-...

 

 

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By Tax Dragon
14th Jan 2020 06:00

I'm not sure that that would be a valid declaration of trust. But I am not a lawyer. Neither are you. Are you sure you are allowed to advise on the document? (Bear in mind too that the subject matter is real estate, which has a particular set of applicable law.)

I'd leave the legal stuff to others.

Hopefully you have at least managed to advise on the tax consequences. That's absolutely something you should do. As your draft words show the transaction is a disposal. In most cases discussed in here, we're talking about married couples. Disposals between married couples don't tend to trigger tax charges; disposals between unmarried couples are not protected from such charges. Other differences include the way the settlements legislation might apply.

Who has advised on the SDLT?

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By Adam12345
14th Jan 2020 09:22

Unless you are legally qualified to do so, you shouldn't be drafting trust documents.

As Tax Dragon says, there will be a deemed disposal at market value for CGT (on the presumption they are not married or in civil partnership based on the names you have used). Also, SDLT may be payable.

Also, the non-tax issues such as the mortgage if there is one etc.

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