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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4723
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My wife and I are making a buy to let investment in a property.

Customer Question

My wife and I are making a buy to let investment in a property. The mortgage on the property will be in both our names, as my wife is not working (and I am). So, my name on the mortgage is mainly to enable us to get a mortgage.
I have been told there is a form to be completed called Form 17, which can be submitted to HMRC, which will enable the profits from the property to be taxed mainly in my wife's name, saving us some tax.
Can you tell me the process and the benefits etc of using this Form 17?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site. Thank you for your question.

Your understanding is correct –

If you live together with your spouse or civil partner, HMRC normally treat income from property held in your joint names as if it belonged to you in equal shares and tax each of you on half of the income, regardless of actual ownership.

If you wish the share to be on actual ownership basis, then you need to complete Form 17.

Please complete this form if you want to be taxed on your actual shares (known as `actual basis'). You will also need to provide evidence that your beneficial interests in the property are unequal, for example a declaration or deed.

The benefit is that the person liable for IT on rental income is also liable to CGT at rates appilcable to that person only.

The disadvantage is that you get one gains allowance instead of two.

More information on this can be found here. The link will also help you with completion of form.

https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/SpecPersTax_iForms/1.0/17&template=17.xdp


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 1 year ago.

Thanks for your response. Do you have any links or examples of the declaration?

Customer: replied 1 year ago.

Also, the hmrc link you've sent - does that need to be completed by both of us?

Expert:  taxadvisor.uk replied 1 year ago.
Thank you for your reply.

Form 17 has to be signed by both of you.
Also, I have provided you links where you can read more about Declaration of Trust with some examples of wordings.

You may find it wothwhile getting a solicitor to draft one for you for a small fee. He/She could also act as witness to the signatures.

https://www.rocketlawyer.co.uk/documents-and-forms/declaration-of-trust.rl#

http://www.pglaw.co.uk/form-17-declaring-interests-joint-property/


I hope this is helpful and answers your question.
Customer: replied 1 year ago.

Hi,

I've got a couple of follow up questions :

Is there any restrictions on the ratio that can be specified on the form eg can I do 95:5 or 90:10.

And does the property need to be owned as tenants in common?

Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply.

[q]
Is there any restrictions on the ratio that can be specified on the form eg can I do 95:5 or 90:10.

[a]
There are no restrictions on the split as it would be based on actual ownership (beneficial interest).

[q]
And does the property need to be owned as tenants in common?

[a]

The type of ownership affects what you can do with the property if your relationship with a joint owner breaks down, or if one owner dies.

For the purposes of share of profits based on beneficial interest (Form 17) it does not matter whether the property is owned as joint tenants or tenants in common.

You may find information here helpful

https://www.gov.uk/joint-property-ownership/overview

I hope this is helpful and answers your question.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it.

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