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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 14004
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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, I have a question about tax on a rental property. I

Customer Question

Hi, I have a question about tax on a rental property.
I own a flat which i purchased around 8 years ago, which is in my name only.
Since buying the flat i am now married and interested to understand if i am able to transfer the property into shared ownership between my wife and I in order to share the capital gains (when we sell) and the rental profits. It's worth bearing in mind that my wife isn't currently working owing to maternity leave and as such is a lower rate tax payer than i am.
I would be interested to know what process i need to follow in order transfer the property and also what the tax benefits are or if there is anything else i need to consider.
Thanks in advance.
Matt
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi Matt
Thanks for your question - I am Sam and I am one of the UK tax experts.
Yes you can and all you need to do is transfer the title deeds into her name also which will give you equal ownership for the purpose of the rental income and capital gains (so 50:50 share) and this transfer will not give rise to a capital gain as you are married.
However before you proceed with this, IF this has ever been your main residence, then to make this transfer will see you losing out on half of the tax reliefs accumulated towards the gain gain exemptions (so the private residence relief for the time you lived here and the last 18 months of ownership and the private lettings relief which can allow a further £40,000 (max) exemption, so do think carefully - as this may actually prove more costly.
It will however save you tax on the annual rental income, so you really need to sit and work this out (savings on rental income v savings on capital gains) before deciding the direction to go.
But I would assume you wife may intend to resume employment so would there be much saving on the rental income position ...
Of course of this has never been your main residence - then it would certainly be more tax efficient to make the transfer.
Let me know if I can assist any further with this matter
Thanks
Sam