BTL in mine or wifes name? & mortgage for tax relief

[zak99]

Hi ,

Can you help find the way forward regarding income tax and mortgage please, I am a bit green about all this!!

I so far own one rental property, a flat which I own outright, current value approx £200k , monthly rent £900 total less agent fees etc. say around £9k pa income less tax

I am considering buying another BTL flat for around £160k and have most of the purchase price cash but wish to take a small BTL mortgage, say £40k, to offset some of the tax (and to save some of our money for a loft conversion on our home, which is in my wifes name at Land registry).

My work income is way below 40% tax threshold, as is my wifes, in fact sometimes my wife is not working so we are not making use of her tax code threshold. Its possible some years, we both will not be earning much.

When I buy the second rental property with a partial mortgage, I'm guessing it should be in joint names so that we can take advantage of my wifes tax threshold? Can I (& should I) nominate the rental income as far as tax to my wife or to both of us?
What can I do to reduce my tax liabilty on the first property (in my name at LR), taking a second mortgage on that would mean another lot of solicitor and survey fees.

Thanks

confused !!!

[TaxationPete]

You own both legally and beneficially the flat so all the income is yours. If you jointly own the second rental property then the rental income must be split 50/50. However you could either own it as tenants in common at proportion that you decide, say 70/30 ro 80/20 and that is how the income will be split. Or you use a Declaration of Trust to change the beneficial ownership. Either way you use a Form 17 to inform HMRC of this agreement. Remember that all the income and all the outgoings like insurance, maintenance and mortgage interest are all apportioned by this established beneficial ownership. Regards Peter

[zak99]

Thanks Pete, but sorry still confused,

Does splitting the ownership via unequal proportions as tenants in common declare who actually owns each relavant portion or is it only related to rent inc/out.

I'm assuming that declaration in trust is completly seperate from the proportions of who owns the property? ie its just relative to rental income/outgoings etc?


rgds

[jeffrey]

Does splitting the ownership via unequal proportions as tenants in common declare who actually owns each relavant portion or is it only related to rent inc/out.

I'm assuming that declaration in trust is completly seperate from the proportions of who owns the property? ie its just relative to rental income/outgoings etc?
If the beneficial shares are agreed and set-up by Trust Deed:
a. all parties are bound;
b. the allocation cannot be altered unless unanimously; and
c. the shares apply to all income earned and capital generated (unless the Deed explicitly states otherwise).