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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My partner and I, who are unmarried, are buying a second property

Customer Question

My partner and I, who are unmarried, are buying a second property together. For ongoing tax reasons it would be better for the income to be in her name. We could reallocate equity in our existing house to cover my equity investment in the new property, or I could gift her the capital. However, we are worried about the tax implications. Can anybody give us an idea of what to look out for.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

As you are unmarried, if you own a property jointly which you let you are free to split the rental income in whatever proportions you like regardless of the ownership proportions. So, you could own a property on a 50:50 basis and your partner could disclose all the rental income as her own in her tax return with you disclosing no rental income. Take a look here for confirmation.

If you make a gift of capital or assets with the intention of conferring a gratuitous benefit (see section 6 here), it will be a potentially exempt transfer for Inheritance Tax purposes. So long as you live for at least seven years after making the gift it will not be included in your estate for IHT purposes. Whilst you and your partner are unconnected, your intention would be to confer a benefit on her by gifting her cash to buy an income producing asset.

Any gain you make from the disposal of a property has to be split in line with the ownership proportions.

I hope this helps but let me know if you have any further questions.

Expert:  TonyTax replied 2 years ago.
Hi again.

It's been a few days since I answered your question. Is there anything you need further clarification on?