Transferring BTL to spouse

[bigbaddom]

Hi

I currently have a btl property that is unencumbered.
I would like to mortgage the property to grow the portfolio but I am currently a higher rate tax payer and any additional btl would be bought through a LTD company.

I would like to transfer the property, either in part or whole, who could then mortgage the property and we could use the funds to grow the LTD company.

My ideal scenario would be that my wife receives the rent and deducts the mortgage interest as she is a basic rate payer. However her actually salary is only £10k so is unlikely to qualify for the best rates.

Is it possible to keep the ownership and have a mortgage in my name but for income to go to my wife and her to be able to deduct the mortgage interest?

Thanks,
Dom

[Eric Mc]

Deduct the mortgage interest from what?

[bigbaddom]

From the rental income

[Eric Mc]

bigbaddom said:

From the rental income

That's not the way it works any more.

From 6 April 2020, the taxpayer gets a tax credit against their tax bill rather than a deduction on the rental income and profit calculations.

https://www.which.co.uk/money/tax/income-tax/tax-o...

[bigbaddom]

Yes, I understand that but correct me if I am wrong but for 20% taxpayers the net effect is the same.

The terminology that I used was incorrect I’m sorry.

If the property and mortgage are in my name and I guess I get a deed saying my wife gets rental income (if the above is possible) would my wife be able to claim the 20% credit?

[Eric Mc]

As far as I know, it is perfectly OK to transfer the property to your wife (assuming you are genuinely married) as the rules are different for unmarried couples.

There are no Inheritance Tax issues either as transfers between spouses are exempt from IHT.

No Capital Gains Tax is chargeable.

If and when the property is eventually disposed of, the spouse will pay CGT using the original cost of the property as the base cost.

Stamp Duty Land Tax (SDLT) is normally NOT payable HOWEVER, it may become chargeable if there is an outstanding mortgage on the property at the date of the transfer.

There's some interesting stuff here -

https://www.ukpropertyaccountants.co.uk/transferri...

[bigbaddom]

Thanks Eric I will take a look through the link.

Yes we are genuinely married.

[Eric Mc]

bigbaddom said:

Thanks Eric I will take a look through the link.

Yes we are genuinely married.

It makes a big difference when it comes to property and tax.

[Muck Dodge]

If the property is just in your name you will need to transfer it to joint names but ensure it is tenants in common 50/50 share, not joint tenants. I think you can do this yourself through the land registry (haven’t done this so not sure of the procedure). Good that there is no mortgage at this time as otherwise it could trigger stamp duty.

Have it remortgaged in both names, when that is complete you can alter the ownership to say 1/99% ownership by filling in HMRC form 17.

Work out the profits and put your relevant % in your self assessments.

I have done this part but circumstances have changed so will be looking to revert to 50/50.

[Stevemr]

Tmw, have good rates, base on rental income, do not have minimum personal income. Part of nationwide.

[bigbaddom]

Thanks everyone.

I appreciate the detailed replies.

It looks like I can fill in the forms on my own on the land registry.