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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My wife and I own a flat in our joint names that we let out

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My wife and I own a flat in our joint names that we let out as a residential letting.
We have a deed to enable the rent to go through my wife's annual tax return 100%. She has losses to carry forward of £12,000. I assume these losses cannot be transferred between spouses/utilised by the spouse?
My income tax affairs are simple. My earnings put me just inside the 45% tax band. I do not have any other earnings or significant income (less than £100 in interest). Our flat runs at a small loss each year. Is it likely to be beneficial to my income tax position for the flat to go through my tax return for future years? I cannot see that it would make any difference?

You cannot transfer rental losses between spouses I'm afraid. You also cannot offset residential rental losses against other sources of income. They can only be offset against rental profits so you would not get 45% tax relief against your other income but they would potentially be worth 45% if you offset them against otherwise taxable rental income which was yours.

I hope this clarifies the position but let me know if you have any further questions.

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