Split of beneficial interest for BTL
Discussion
A few questions on beneficial interest with respect to BTL:
1) I understand that I can split the beneficial interest to someone I'm not directly related to? I'm not married to the missus, but she's on a lower tax rate than me.
2) can I split 100% her, 0% me, or am I limited to 99% her, 1% me?
3) what's the process for doing this? Do I need to formally declare anything to HMRC?
4) I understand that as *legal* ownership is not being changed, the lender, land registry don't need to get involved?
5) is the process quick? I'd like to do this ahead of the 19/20 tax year if possible.
If there are any pointers to an online "how to do this" type guide, that would be great.
1) I understand that I can split the beneficial interest to someone I'm not directly related to? I'm not married to the missus, but she's on a lower tax rate than me.
2) can I split 100% her, 0% me, or am I limited to 99% her, 1% me?
3) what's the process for doing this? Do I need to formally declare anything to HMRC?
4) I understand that as *legal* ownership is not being changed, the lender, land registry don't need to get involved?
5) is the process quick? I'd like to do this ahead of the 19/20 tax year if possible.
If there are any pointers to an online "how to do this" type guide, that would be great.
^^^^ Note Eric's sage advice above.
Beneficial ownership can be moved by a simple declaration of trust. You can set the percentages at anything you like. It needs to be properly documented or you could get into significant trouble with HMRC, although nothing has to be "declared" to HMRC at the outset. The documentation can be very quick. Once documented you have effectively made a gift of [half] the property to your OH so your legal position has definitely changed even though nothing shows at the Land Registry. Put bluntly, you can't unilaterally get it back! So broadly speaking, and this dovetails with Eric's comment above, you've got to give away half of a valuable property to save tuppence worth of tax. So it all comes down to how confident you are about relationship with OH in the long term.
Clint Eastwood might add, "You've got to ask yourself a question: 'do I feel lucky?' Well, do ya, punk?"
Beneficial ownership can be moved by a simple declaration of trust. You can set the percentages at anything you like. It needs to be properly documented or you could get into significant trouble with HMRC, although nothing has to be "declared" to HMRC at the outset. The documentation can be very quick. Once documented you have effectively made a gift of [half] the property to your OH so your legal position has definitely changed even though nothing shows at the Land Registry. Put bluntly, you can't unilaterally get it back! So broadly speaking, and this dovetails with Eric's comment above, you've got to give away half of a valuable property to save tuppence worth of tax. So it all comes down to how confident you are about relationship with OH in the long term.
Clint Eastwood might add, "You've got to ask yourself a question: 'do I feel lucky?' Well, do ya, punk?"
OK, understood. Thanks for the swift response. We're likely to get married in the near term in any case, in which case, it's all fair game!
In the case where I would be married, but the property is still held in my name, in order to allocate the beneficial interest to the missus do I need to move the title to a joint *ownership* structure, or would the same thing be achieved via splitting the beneficial interest as indicated by the post below?
In the case where I would be married, but the property is still held in my name, in order to allocate the beneficial interest to the missus do I need to move the title to a joint *ownership* structure, or would the same thing be achieved via splitting the beneficial interest as indicated by the post below?
rockin said:
^^^^ Note Eric's sage advice above.
Beneficial ownership can be moved by a simple declaration of trust. You can set the percentages at anything you like. It needs to be properly documented or you could get into significant trouble with HMRC, although nothing has to be "declared" to HMRC at the outset. The documentation can be very quick. Once documented you have effectively made a gift of [half] the property to your OH so your legal position has definitely changed even though nothing shows at the Land Registry. Put bluntly, you can't unilaterally get it back! So broadly speaking, and this dovetails with Eric's comment above, you've got to give away half of a valuable property to save tuppence worth of tax. So it all comes down to how confident you are about relationship with OH in the long term.
Clint Eastwood might add, "You've got to ask yourself a question: 'do I feel lucky?' Well, do ya, punk?"
My partner and I are not married and own a few properties. We each own property individually and some joint (depending on how they were financed at the time). However I own a disproportionate % overallBeneficial ownership can be moved by a simple declaration of trust. You can set the percentages at anything you like. It needs to be properly documented or you could get into significant trouble with HMRC, although nothing has to be "declared" to HMRC at the outset. The documentation can be very quick. Once documented you have effectively made a gift of [half] the property to your OH so your legal position has definitely changed even though nothing shows at the Land Registry. Put bluntly, you can't unilaterally get it back! So broadly speaking, and this dovetails with Eric's comment above, you've got to give away half of a valuable property to save tuppence worth of tax. So it all comes down to how confident you are about relationship with OH in the long term.
Clint Eastwood might add, "You've got to ask yourself a question: 'do I feel lucky?' Well, do ya, punk?"
The ideal situation for us would be for us both to hold 50/50 shares in all our properties without triggering capital gains until we sell.
On that subject if we then sold would we get both capital gains allowances?
I'm not bothered by "giving away"my property, we both own some, and the imbalance has mainly come about by my partner taking time out bring up the kids.
DoubleSix said:
Are there not CGT implications in doing this or is that only on change of title?
There are full tax implications, CGT as well as Income tax. IHT may also be relevant.There's no CGT charge on a gift between spouses or civil partners - the recipient takes over the donor's base value (or relevant % of it). OPs specific situation will depend on the couple's precise relationship, the extent of donor's capital gain to date and any available CGT losses. CGT annual allowance may be available to cover all or part of any otherwise taxable gain.
Similarly there's no IHT implication of gifts between spouses or civil partners.
Can you not use form 17?
As I understood it, the property can be in your name but the income can be in your partners. You'll still have to pay the full CGT when you sell, but the income should be taxed at your partners rate.
All speculation of course, but watching this thread with interest as I was hoping to use the above when I pick up a BTL later in the year
As I understood it, the property can be in your name but the income can be in your partners. You'll still have to pay the full CGT when you sell, but the income should be taxed at your partners rate.
All speculation of course, but watching this thread with interest as I was hoping to use the above when I pick up a BTL later in the year
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