Transferring property into Spouse name Part II

[kohini]

Hi

I am a new to property investment.

We have just rented out our home. My wife and I are basic rate tax payers and anticipate an approximate £4000-£5000 gross proft annually.

As my wife will be giving up work this year and may not find a job for a while it may mean she does not have any earnings for the following tax year.

So should I transfer the property or part property in her name to take advantage of tax breaks? Or should this wait till the next tax year before I change it?

Help would be greatly appreciated :)

[Tax Accountant]

Hi

I am a new to property investment.

We have just rented out our home. My wife and I are basic rate tax payers and anticipate an approximate £4000-£5000 gross proft annually.

As my wife will be giving up work this year and may not find a job for a while it may mean she does not have any earnings for the following tax year.

So should I transfer the property or part property in her name to take advantage of tax breaks? Or should this wait till the next tax year before I change it?

Help would be greatly appreciated :)

If the property is in joint names, all rental profits is assessable equally between the two of you.

If you wish your wife to have a larger share of the rent, you should see your solicitor and ask him to draw up a Trust Deed indicating the percentage in which the beneficial interest in the property is owned by each of you. This can be in any split you wish and you can indicate the date from when this is to be effective.

I would suggest that you keep at least a small amount for yourself, say 1%.

You should notify the new shares to your and your wife's tax offices on a specific form available from thr tax office.

If both of you agree, the shares could be altered at a later date by a new Trust deed.

Seek advice from your solicitor of the consequences if your wife wishes to divorce you in the future.

Ramnik

[Smiler]

Is the property mortgaged?

If not then transferring is fairly straighforward. Three forms from the land registry, plus a small fee, and the property is hers.

I'm a trusting guy:D

If it is mortgaged then the mortgage co. might have a say over matters

[Tax Accountant]

Is the property mortgaged?

If not then transferring is fairly straighforward. Three forms from the land registry, plus a small fee, and the property is hers.

I'm a trusting guy:D

If it is mortgaged then the mortgage co. might have a say over matters


I feel it is best to effect the Trust Deed as suggested in my last reply, mortgaged or not mortgaged.

This is simple, inexpensive, practical if subsequent changes are required, and bypasses the lender if the property is mortgaged.

A Trust Deed is basically an informal means to achieving the ends. It is simply a side agreement between you and your wife which leaves your Title Deeds as they are. It would be easy to revert back to the position of the Title Deeds at a later date, if required, by simply making another agreement to state that this is what both of you want to do.

Unless of course you want a permanent change to your Title Deeds and gift the property to your wife for good, in which case you can do as suggested above by Smiler, the trusting guy.

Remember, if you wish to sell it in the future, it may be better if it held by you jointly at that time to obtain benefit of annual CGT allowance for both of you instead of her alone.

Ramnik