Joint Ownership - Tax Return

[Landlord9467]

Hi there,

I am wondering if someone can help me understand whether or not I should pay tax on a jointly owned commercial property.

The property is equally owned between me and another person on an equal share basis. However all rental income received was paid directly to the other person and they have also been taking care of all mortgage payments. If there has been any profit this has been retained by the other person and has not been passed onto me.

On this basis do I have to pay any rental income tax with regards to this commercial property. (I understand that on sale capital gains tax will apply).

Any advice would be most welcomed.

Kind Regards,

[King_Maker]

Provided the other person is not your spouse (or registered Civil Partner) and there is a proper agreement, the rental profit can be shared as you both agree - 50:50 ownership notwithstanding.

[Landlord9467]

Hi King_maker,

I must firstly say thank you for your prompt reply. I hope I can return the favour someday.

They are not my spouse or related to me apart from we had some common business interests. I can also demonstrate that I received no income from any rent charged on the property.

Does that mean I can submit my tax return as showing no rental income even though I have always had 50% ownership of the commercial property?

Many thanks,

[mazzster]

I believe so, though you should ensure the co-owner declares 100% of the net income/deficit so as to be consistent.

[TaxationPete]

Why do you not share the rental gain, 'sleeping' partner perhaps. If you do not recieve, directly or indirectly any of the rental income then there is nothing to report. If you dispose of the property you will still have a CGT liability. Regards Peter

[King_Maker]

I believe so, though you should ensure the co-owner declares 100% of the net income/deficit so as to be consistent.

I would agree.

You could go even further by adding the relevant details in the "white space" on the Tax Return.

IMHO, it is better to deal with any questions from HMRC now rather than years later when a successful HMRC challenge (for whatever reason)could involve paying the back tax and penalties and interest thereon. I have seen instances of what started out as a small amount of tax escalate to may £000s.

[Landlord9467]

Hi there,

May I just say thank you all for all your advice; it has been most helpful.

Thanks once again!