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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My earnings just make the 40% threshold per year, I rent my

Resolved Question:

My earnings just make the 40% threshold per year, I rent my house because I moved with work, so this extra income is all at 40%. my partner is on low income and I was thinking of adding her to the deeds, could she then collect half (or all) the rent? or is that only possible for married couples? thanks.
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

You could add your partner to the deeds and let her share the rental income for income tax purposes but you have to be mindful of the fact that this would represent a transfer of interest to her that.

If this is your only property and main residence for CGT purposes then any gain pertaining to the transfer would be covered by private residence relief and no CGT payable.

On the other hand, if no money is exchanging hands, then the perceived value would be regarded as a gift to her and therefore potential exempt transfer for inheritance tax purposes.

You should be aware of the above mentioned tax implications.

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.


thanks for the reply.


would a declaration of trust be a better option? again 50/50 split and each recieving half the rent, or even 100% to her? would the house still belong to me as my name will be soley on the deeds?


 


my mortgage is less than half the house value, could I still use the interest for tax purposes against my half of the rent (£350).

Expert:  taxadvisor.uk replied 3 years ago.
John, thank you for your reply...

Any transfer of asset to a spouse is tax neutral i.e. no gain or loss on the resultant transfer of ownership.

A declaration of trust would be helpful but I am no lawyer and suggest you seek legal advice on this. You may find this article helpful

http://www.theguardian.com/money/2007/feb/10/familyfinance.property1


As far as interest payment is concerned, provided it relates to a property that is let then it can be offset against the rental income.

I hope this is helpful and answers your question.







Customer: replied 3 years ago.


If she were to property manage the rental, collect rent, first point of call etc, could she take say 50% as a fee? (she doesn't live with me) and pay her tax via self assessment and I could use the fee as cost for tax purposes, or would the high fee be flagged by HMRC?

Expert:  taxadvisor.uk replied 3 years ago.
John, thank you for your reply.

She could charge a fee for property management but you have to be reasonable in what is claimed against rental income as property management costs in the event HMRC were to challenge/question it.

She could charge for site visits in addition to a percentage fee but I would keep it below 20% of rental income.

I hope this is helpful.
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