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  • Tax

    Buying BTL with my wife - rental income

    We are looking at our first BTL. I'm a higher rate taxpayer and my wife pays the basic rate. How could we best structure things so that my wife pays as much of the tax as possible? I assume the bank won't let us put the property in her name if we are both on the mortgage?

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    You have a few options.
    1) Obtain a mortgage where you are both applicants but only your wife is on the deeds
    2) You act as mortgage guarantor (less common these days) and wife owns and borrows.
    3) use a corporate vehicle (yes it poses more questions than this) and allocate the profits extraction to her
    4) own as tenants in common and follows the steps to get HMRC happy that your wife is beneficially entitled to the income. (It’s not hard but too much to write here)

    And of course the other option is just say sod it and pay more tax. I suggest you take advice.
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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    Hello James,

    Yes they will. You can get a joint Borrower, Sole Proprietor mortgage - both of you borrowing, just one on the deeds. 

    You might want to take some tax advise before you take the plunge, I'm sure they can provide guidance.
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    You can contact me via Direct Message, or 07788 219647 or call the team on 01206 654444 for personalised quote and advice


    Hi James

    I would speak to your solicitor as you can buy the property together but may be able to place a larger share of it in your wife's name.

    Alternatively you can draw up a declaration of trust which specifies how the income from the property will be split.  I had 90% of our properties in my wife's name for the same reasons as you.  There is a form to complete with the HMRC which can be sent off to them with the declaration.  I have since drawn a declaration back to 50% each as I have retired from my job.  I was advised to do this anyway eventually before the properties are sold for capital gains tax reasons.
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    canarykev, this does not work for income tax purposes. Income from jointly owned property between spouses is shared equally (by statute). That's why there is all the hassle to get it sorted for tax purposes.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022