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Property in joint names, who pays tax?


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Hi everyone, writing on behalf of a friend.

Him and his wife bought an investment property and both of them are named in the deeds as joint owners.

They bought the property so the wife could leave her job and dedicate herself to the kids and managing this property.

The question is: once she finish decorating and rents it out, can she declare the all income for herself so to use the tax free allowance?

Or it needs to be declared as joint income 50/50?

The husband works full time btw.

More info:

They bought the property outright by remortgaging their home.

He doesn't want anything to do with it, it was her idea and a way out of a job badly paid and with unsociable hours.

Thanks for your help 😊

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Prob Q for HMRC, they can be quite helpful.

I would have thought wife should be sole LL, resp for all rent, allowable expenses and all tax liability against her personal tax code.

Problems may arise with CGT liability when the property is sold, but I think each owner can set off his proportional profit share against personal CGT allowance, but who can say what tax changes may be implemented by the next Govt.

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By default it is 50/50.

 

There appear to be ways around it, but not for married couples.

 

http://www.lawpack.co.uk/landlord-and-tenancy/managing-your-tenancy/articles/article1824.asp

 

Suggest it's one for them to do a bit more research.

 

There is plenty of information on the HMRC website about renting out homes, what deductions can and cannot be made, and so forth.

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Thanks guys, they're legally married, so I suppose they've to declare the income 50/50.

He wanted the property only on his wife name, but the bank said that they couldn't borrow more money unless they both became owners of the new place.

I found this odd at the time.

Anyway, he's now thinking to change the deeds so everything would be straight forward.

I told him to speak to an accountant.

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Owners do not have to be joint LLs. If split is 50:50, that is true equally for income/allowable expenses. I believe married taxpayers can nominate an alternative allocation for any jointly owned assets. As said, HMRC advice is most informative for legal tax avoidance, but not illegal tax evasion.

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