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With restrictions mortgage tax relief coming in I will end up with income well over £100,0000. All my properties are currently in my name. Am I right in thinking I should make a declaration of trust giving my wife a proportion of my income and file form 17 to HMRC to do so. I believe this is the easiest way to go about things. As the trust is with my wife rather than say a company reading between the lines it looks that it is best to keep it between us and HMRC and not inform mortgage lenders. I appreciate that may be against their T&C's but I believe it is common practice when trust is only between you and spouse. I pressume SDLT is still payable on the loan secured on property and so therefore need to do before April so as to have zero liability.
Any advice greatly appreciated ecspecially how common this is and whether mortgage company informed
Not quite as simple as that.
If the property is in your sole name, transferring partly to wife will need mortgage lenders consent.
If it was previoulsy held as tenants in common with your wife and you are changing %ages then no need to get lenders consent - but doeant look like thats the case for you.
There may also be stamp duty implications depending on value of proeprties and amount of mortgage on them.
You need to seek advice and fast and pray your mortgage lender can move fast. The clock is ticking for you to do the transfer prior to 31st March - the Form 17 can be done after that (I think you have 60 days to do it in).
Thanks drdes for help I appreciate that to dot all i's the mortgage company must be informed, however I have been led to believe that more often than not this does not happen and the only paperwork is between you and HMRC. I have been told the land reg are not even informed. Perhaps this course of action may be ill advised but is it quite common and relative low risk?
Firm 17 changes the split from a default of 50:50 to whatever % you want. But the property has to be jointly owned.
I don't see how you can do this without lender consent but maybe someone else knows better.
Form 17 arrangements would be applicable when you both own the property, as this ultimately allows different splits to be reported on each of your self assessment tax returns. Our blog goes into this in much more detail: https://www.rita4rent.co.uk/blog/2014/09/23/form-17/
There may well be a stamp duty implication here, given the mortgage, and as such, it would be well worth taking professional advice before carrying out any such action.
As property tax advisors, we are not able to comment on your mortgage lender, but separate advice should be sought as to your position here.
As an aside, I note your income will be above £100k once the new mortgage interest rules come in. It is worth pointing out that in this instance, the added issue here is that adjusted net income exceeding this level is when your personal allowance begins to reduce. For every £2 your adjusted net income exceeds the £100k threshold, your personal allowance reduces by £1, and so once your adjusted net income exceeds £121,200, your personal allowance would be nil.
For any of your property tax needs, please do not hesitate to contact RITA4Rent, property tax specialists, on Freephone 0800 1 22 33 57, or via email using the contact details below.
RITA4Rent (Rental Income Tax Advisors)
Specialists in Landlord Taxation
Recommended tax advisors of the Residential Landlords Association
Follow us on Twitter @Rita4Rent
clients (at) rita4rent (dot) co (dot) uk
Thanks RITA I will be in touch shortly, unfortunately in the middle of a messy eviction at moment
Dear Fedup Landlord
I am exactly in the same boat as you, i have a property portfolio all in my name, so are the mortgages, i have completed the declarations of trust by using a proffessional specialist. I must also say what drdes wrote is completely incorrect.
A declaration of trust is between you and the spouse, hmrc will have to be informed of the changes, FORM 17 does not need to be completed as legal title is not changing, the legal title will remain with you but the benfeciary interest and capital will be slit 50/50 between husband and wife, their is no stamp duty or CGT tax to pay. The mortgage providers do not need to be notified as the legal title is not changing!.
I have done the above end of last year because of the mortgage tax relief cut. completely wrong advice drdes, shocking|
if you would like to email me direct send me a private and will send you my email address.
i have read your post regarding declaration of trust and could really do with some advice, especially now that taxation rules have/are changing. I am struggling getting a firm awnser.
Your help would really be appreciated.
My email is firstname.lastname@example.org
look forward to hearing from you.
Please help, How do you send a private??
I am selling soon with a likely 100k profit.
I am using a DOT on day of exchange and will split between me and my wife , thus two cgt allowances and a portion of cgt at 18 % , I will give my wife more %, so reducing the 28% liability, all perfectly legal, though not all law firms do it. MX said I couldn't put my wifes name on Mortgage as its tax avoidance!