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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3671
Experience:  Solicitors 2 years plus PQE
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I have a question about transferring my rental income to my

Resolved Question:

I have a question about transferring my rental income to my wife via a Declaration of Trust. Is this possible? How do I do this? Are there any implications in relation to the mortgage?
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. This arrangement is possible as a declaration of trust can be a confidential document, however if you do not obtain the consent of your mortgage lender to do this, then it is possible that the Declaration will not be binding on the mortgage lender if you went insolvent or the mortgagec company appointed a property receiver. Depending on your tax circumstances you will may also need to file a Form 17 https://www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17 - at HMRC. Is your wife on the mortgage deed?
Customer: replied 2 years ago.
No the mortgage is in my sole name. My wife is not on the mortgage deed. Is that a problem?
Expert:  Alex J. replied 2 years ago.
Hi, Thank you. No it is not a problem, but if you want this arrangement to be binding on the mortgage company you need their consent to it. Without their consent, if you went insolvent, your wife would not be able to enforce this right against the mortgage company. Kind regards AJ
Expert:  Alex J. replied 2 years ago.
Essentially if you keep this a secret from the mortgage company, it will only cause you a problem if you went insolvent. Also you would need to have to right to sell the property without your wife's consent if the mortgage company required you to sell for any reason.
Customer: replied 2 years ago.

Can you explain to me how I can get this arranged and also elaborate on what you said about a form 17 please.

Customer: replied 2 years ago.

Also, if i transfer the rental income to her, can I also transfer the mortgage expense to her also. We would still like to offset the mortgage interest payments with the rental income.

Expert:  Alex J. replied 2 years ago.
Hi, Thank you. You can either go to a local solicitor to have a declaration of trust drafted (cost about £250 plus VAT) or you can download a template online. I would recommend you have a solicitor do it because it will affect your tax status. The Form 17 is a form to declare to HMRC that you are no longer receiving the income of the property. Your wife can make the mortgage payments but she may have to pay tax on the income earned and you will still be liable for the mortgage if she stops paying it. Kind regards AJ
Customer: replied 2 years ago.
Can you send me a link to the template. Also, what do you mean when you say that i should go to a solicitor as it will affect my tax status. Surely it will still affect my tax status even if I don't go to a solicitor. If I don't go to a solicitor then is it still a valid document?
Expert:  Alex J. replied 2 years ago.
Hi, Thank you. My apologies, to clarify what I meant is you should use a solicitor to ensure that the document is accurately drafted, the document will have an affect on how much tax you and your wife pay and you do not want it to contain any oversights or anything that may cause HMRC to challenge it - for that reason it would be worthwhile paying a solicitor to draft - especially as if they do it wrong you have the benefit of their professional indemnity insurance.
Customer: replied 2 years ago.

So can I get a Declaration of trust assigning 100% interest to my wife.

Even though it is not a jointly owned property.

Form 17 seems to imply that the property needs to be jointly owned.

Also, there are 2 sections : "Beneficial Interest in Property" and "Beneficial Interest in Income arising". What whould i need to state in both of these?

In the deed of trust that I have drafted. There is 1 beneficiary : My wife....

Expert:  Alex J. replied 2 years ago.
Hi, Thank you. You have to make some declaration to HMRC otherwise they will continue to tax you for the income. Your wife is taking a beneficial interest in the property (i.e over its income) - if HMRC wont accept this form from you, ask them if they would accept seeing the declaration of trust. You need to state that your wife's rights are to the income only.
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