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TonyTax
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I have to get a buy to let mortgage under joint name with my

Customer Question

Hi there
I have to get a buy to let mortgage under joint name with my husband. My husband is a high band tax payer. I am on a low tax band (salary of 25,000). We need to take out the new mortgage in joint names, due to my lower income. However, we want to minimise the tax paid on the rental income by my husband at the higher rate. We are aware that in general the share of tax is split 50-50 between husband and wife, how can we achieve setting up unequal share say 90-10 so we pay the lowest tax payment on the income possible? The deposit/ equity payment (either 25% or 40% plus all the fees come from me ). All income from rental will go directly to me.
Submitted: 5 months ago.
Category: Tax
Customer: replied 5 months ago.
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Expert:  TonyTax replied 5 months ago.

Hi.

Unless a property is owned by a married couple in proportions other than 50:50 and HMRC are informed via the completion and submission of a form 17, the rental income has to be split on a 50:50 basis for tax purposes. As it says in the notes, " you cannot choose to have the income taxed on an unequal basis because you think it would be to your advantage". A deed of trust can be set up to split the ownership on a basis other than 50:50. The title deeds simply show the names of the individuals (a maximum of 4) those with an interest in the property, not their respective shares. You can read about deeds of trust here.

Some taxpayers have a deed of trust drawn up to divide the beneficial interest in the rental income only, not the ownership of the property which is clearly done for tax reasons and appear to get away with it in spite of what the form 17 notes say and probably without the approval of the mortgage lender if there is one. I'd advise you to consult a property lawyer to discuss the possibility of a deed of trust.

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

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