Buy to let tax query - wife's self assessment
Discussion
Would like some advice on this tax position.
I own a BTL, which I had before I got married. It's in my name, but for the past few years my wife has been managing the property - including recently a complete renovation, without any involvement from me. This includes dealing with the tenants, builders, and chasing up when things go wrong. The rent also goes to her account, but the mortgage goes out of mine.
The question I have is, can I declare the rent money profit on her self assessment to be taxed under her allowance rather than mine? She is a housewife and I am a higher rate taxpayer. I am hoping this is possible considering I don't really do anything to manage the property and our tax obligation would be a lot less under her name.
Cheers
I own a BTL, which I had before I got married. It's in my name, but for the past few years my wife has been managing the property - including recently a complete renovation, without any involvement from me. This includes dealing with the tenants, builders, and chasing up when things go wrong. The rent also goes to her account, but the mortgage goes out of mine.
The question I have is, can I declare the rent money profit on her self assessment to be taxed under her allowance rather than mine? She is a housewife and I am a higher rate taxpayer. I am hoping this is possible considering I don't really do anything to manage the property and our tax obligation would be a lot less under her name.
Cheers
No - it's your property so it's your rent and it's you who has to pay the tax on any rental profits.
There are a couple of steps you might consider that could mitigate the tax situation.
You could gift some or all of the property to your wife (assuming you are lawfully married).
If the entire property is transferred, then it becomes her property and she will pay the tax on the rent rather than you. This would be beneficial if she is a basic rate taxpayer and you are a higher rate taxpayer.
If she becomes joint owner with you of the property, then the rental profits are split and she pays tax on her share of the profits and you pay tax on your share.
Transfers of assets between husbands and wives are exempt from inheritance tax or CGT.
In order for the transfer of some or all of the property to your wife, it must be done properly with all the usual legal matters taken into account.
There are a couple of steps you might consider that could mitigate the tax situation.
You could gift some or all of the property to your wife (assuming you are lawfully married).
If the entire property is transferred, then it becomes her property and she will pay the tax on the rent rather than you. This would be beneficial if she is a basic rate taxpayer and you are a higher rate taxpayer.
If she becomes joint owner with you of the property, then the rental profits are split and she pays tax on her share of the profits and you pay tax on your share.
Transfers of assets between husbands and wives are exempt from inheritance tax or CGT.
In order for the transfer of some or all of the property to your wife, it must be done properly with all the usual legal matters taken into account.
She could charge a fee for "Ongoing property management" - it will be a valid expense against your income and be assessable on her, subject to NI and Tax bit only if the fees exceed the annaul limits.
The fee needs to be at a level that is not seen to be abusive given the tax saving by you - it may be best to say this was £x per hour and get her to monthly invoice you for these sums.
David
The fee needs to be at a level that is not seen to be abusive given the tax saving by you - it may be best to say this was £x per hour and get her to monthly invoice you for these sums.
David
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