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I tried to look up a topic that mataches my case but didn't manage to find any.
I have recently acquired my first buy-to-let property, which I intend to manage myself (my unemployed wife will). I stay in Scotland and I am on 41% on income tax (my annually wage is £50k).
I was advised to add my wife's name to the mortgage and property title, so we could use her income (which is £0) to combine with mine, to avoid paying more tax than we should. However she hasn't been living long enough in the country and the lenders would not accept her name in the mortgage application nor the title deeds. So we had to proceed with the purchase with just my name, so I own it alone.
I know there is a marriage allowance but it is too small. The rental income will be around £800 per month, £9,600 per year. I am trying to find way to avoid pay 41% of that to the taxman.
Is there a way to declare this £9,600 as my wife's income if her name is not included in the title deeds?
A few points to consider.
1) As you are married, if she is on the title deeds (mortgage irrelevant) and the property is owned jointly then she for tax purposes has 50% of the property rent (and you the other 50%).
2) If she is not in the UK, then she may not get the personal allowance. It will depend on whether she is a British Citizen, an EU resident (certainly until BREXIT) and where she is tax resident.
She may therefore be required to do a self assessment tax return. To allocate all the income to her you need to go through a few hoops which I have done for a few on the tribe.
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
Firstly thanks for your prompt response to my post !
Yes we are married and she is in the UK (she has been here for 5 months), she has a residence permit based on family reunion(she is not EU).
The banks have no problem with her visa type but they say she hasn't lived here long enough to build up a solid credit history therefore they will not accept her in the mortgage application.
The solicitor told me, for her name to be in the title deeds, she has to be in the mortgage application as well. So as it stands, I own the house myself in the eyes of the land registry.
I was wondering if there is a way around mitigating extra income tax until she becomes eligible to be in the mortgage and I can add her as well to the title deeds. Or maybe there is something else I could do... any recommendations?
I believe a deed of trust will sort this for you.
Rental Income Tax Advisors are the preferred tax partner of Property Tribes and can advise you on this issue, as you really should seek bespoke tax advice in this instance. You can find all RITA's contact details in the header banner at the top of this thread, where you can also click through to their site.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thanks guys! I thought it would be simple but looks like I will have to speak with a tax adviser !
Really appreciate the quick response from everyone!