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bigduckontax
bigduckontax, Accountant
Category: Tax
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My wife and I rent out a property which we co- own outright.I

Customer Question

My wife and I rent out a property which we co- own outright.I wish to transfer complete ownership to my wife as she is a non tax payer.Is it cost effective to do this and how do I go about doing this and what costs will be involved ? We are just about to complete on another property which she will own outright,which will be registered with the land registry.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
You merely arrange with a solicitor to convey your part of the property to your wife. This revised ownership can then be registered with the Land Registry (LR). There are no tax implications with an inter spousal transfer. Mark you when I did a similar conveyance about a decade ago in Scotland the solicitor's bill ran, if I recall, to some 500 quid, so watch out! There is an alternative and much cheaper procedure which is merely to register the change with the LR. This would cost you about a tenth of using a solicitor, but you have to be 100% sure of the title before you embark on this method.
Once she owns the whole property then all rental income leas appropriate deductions [see http://www.which.co.uk/money/tax/guides/tax-on-property-and-rental-income/allowable-expenses-and-allowances/ for full details; the list is long] will accrue to her and require declaration on an annual self assessment tax return.
I do hope i have shown you that your proposals are rather simpler than you might think and given you appropriate gukdance.
Customer: replied 2 years ago.

Hello Keith,

Thank you for your reply.I need a clarification on the '100% sure of title'. We have the deeds of the rented property, so would this be '100 % sure' Thanks

John

Expert:  bigduckontax replied 2 years ago.
I regret that it may not be 100% sure. There may exists all sorts of hidden horrors lurking against the title. That is why a solicitor is almost invariably used in this process. Remember when a Private Bill was introduced in Parliament to redevelop the Kings Cross area and swathes of surrounding railway land? The Committee of 3 members examining the bill were horrified to discover that it included a clause permitting the demolition of listed buildings, including St Pancras and King's Cross Stations. It was summarily rejected on those grounds alone, but then up popped Barts pointing out that the land was a determinable fee simple and on ceasing to be used for railway purposes reverted to the Trustees of the hospital. So you see what I mean about using professionals.
Customer: replied 2 years ago.

Hello Keith,

Thanks again. As I am dealing with a tax expert, I need to ask a further question on the shared property that we rent out. All the rent received, is paid in my wife's name ( she is the landlord), into a separate account. This was done because she was a non tax payer,and we knew that the yearly rent would be under her threshold so no tax was due.I have now been led to believe that she should have done a self assessment even though no tax was due. I wish to put this right asap. As I am the co owner (which I hope to change as mentioned in earlier) would I be liable for taxation ?

Regards

John

Expert:  bigduckontax replied 2 years ago.
A person should always make a self assessment tax return if in receipt of income which has not been subject to deduction of tax. Having said that where in the end no tax is actually due it is a splendid exercise in financial futility which is why HMRC often do not require such an individual to assess. However, HMRC approval is needed and I would advise you to consult your local tax office to obtain such an authority. Failing that she will have to self assess as indeed as she will anyway if her net income goes over her Personal Allowance; currently 10K.
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.
Customer: replied 2 years ago.

Hello Keith,

Sorry, but have been away from my e-mail for a while and didn't realise that you were waiting for assessment. I thought that I had done an excellent smiley face! I most certainly do not want you to go away unappreciated.Sorry for any misunderstanding

John

Expert:  bigduckontax replied 2 years ago.
No problem John, I have noted your assessment and am delighted to have been of assistance. The only time I was involved in a direct Land Registry transfer was in respect of a club of which I was a member. The property in question was transferred between two companies within the group overseen by the Chartered Surveyor who had arranged the original sale of a Local Authority surplus property to a subsidiary company in the first place.

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