Property in my name, can I split rental income with spouse

Hi,
 

Thank you for your question. I would advise you that for tax purposes providing there is no change  in the ownership of the property, only the income arising from the property, than your partner would not be considered to have a 2nd property. I cannot however answer the position regarding stamp duty to the Stamp Duty Office. You can find their details at Stamp Duty Land Tax - GOV.UK (www.gov.uk).  Thank you.

Hi HMRC Admin I have purchased a property with my friend, but the legal title is only on my name so i have made a declaration of bare trust to split the rental income. Could you please help me with some questions 1) does my friend's name have to be on the tenancy agreement as a landlord with my name or only my name as a landlord can work? 2) the mortgage is only on my name, do i have to split the mortgage interest with my friend as an expense or only i can use it as the certificate of interest will be only on my name Thank you Sazid

Hi Sazid Mohmed,

Where there is evidence such as a declaration of trust that your friend is entitled to a share of the income then it is not necessary for their name to be on any tenancy agreement.  
How you split your shares of any income from the property and how you split any expenses claimed against that income is a matter between you and your friend there are no definitive rules for this.
This guidance relates to a property owned jointly with a friend as mentioned in your question.  
In the subject column, however, you refer to splitting income with your spouse.  
If the property is in fact jointly owned between you and your wife this guidance wouldn't apply.  
A 50/50 split would apply to income and expenses unless a valid declaration was made on form 17 showing that the property is owned  and the income split in different shares.

Thank you.

 

Hi HMRC Admin 20 Thank you for your prompt response, You have mentioned (This guidance relates to a property owned jointly with a friend as mentioned in your question.) Just want to clarify that the property is only on my name ( only my name is on legal title) my friend is 50% beneficiary on the deed of trust Regards 

Hi
 

Sazid Mohmed ,   Thank you for your question. If is jointly owned with a friend then the deed of trust is sufficient to declare the split of rental income.

Thank you.

Thank you HMRC Admin 17 Can you tell me what do you mean jointly owned? As I have mentioned the legal title is only on my name, Does this count as jointly owned? Thank you 

Hi,
 

Thank you for your qestion. Joint ownership means that two or more people are the legal owners of the property.

Thank you.

Hi HMRC Admin 20 this is the same question but previously I put it down incorrectly so it was misunderstood. so can you clarify it again please. I have purchased a property on my name ( the legal title is only on my name ). my friend put money towards the purchase but his name is Not in the legal title, ( NOT JOINT Names) so I have made a declaration of bare trust to split the rental income. Could you please help me with some questions 1) does my friend's name have to be on the tenancy agreement as a landlord with my name or only my name as a landlord can work? 2) the mortgage is only on my name, do i have to split the mortgage interest with my friend as an expense or only I can use it as the certificate of interest will be only on my name Thank you 

Hi again. I'm writing again to clarify something, following my previously submitted questions. In a situation where I transfer the right to rental income from a property where I am sole owner to my mother or wife via a deed of trust, am I able to retain the underlying ownership? i.e. In a situation where the property is later sold, would I be signing away the sale proceeds to this person or can underlying ownership and right to rental income be kept separate in a deed of trust structure?

Hi,

Where there is evidence such a a declaration of trust that your friend is entitled to a share of the income, then it is not necessary for their name to be on any tenancy agreement.  

How you split the share of any income from the property and how you split any expenses claimed, including mortgage interest payments, against that income is a matter between you and your friend. There are no definitive rules for this.

Thank you.

Hi JTax
The beneficial interest refers to any income the property generates whether it be rental income or a capital gain so if you transfer some of it, then you lose any right to profit on that share.
Thankyou.
Regards.

Hi HMRC, Declaration where the split of beneficial ownership and income differ.(Apologies if this has previously been answered or if this is not the right place to ask...) My wife and I own a property as tenants in common 50/50. We now want to rent out the property and assign all the income to my wife. Our solicitor has drawn up a deed of trust holding the net rents and profits until sale 100% my wife - 0% me and the property and proceeds of sale 50% - 50% if we sell the property. Form 17 notes "it cannot be used if you are entitled to the income in different proportions to your beneficial interest", which will be the case here. CG2202 notes that "a couple cannot make a declaration where the split of beneficial ownership and income differ. Nor do they have to make a declaration even if they are entitled to". Can I take it from the notes on F17 and CG2202 that we do not need to notify HMRC of this arrangement, other than on my wife's self-assessment form? If we do need to notify HMRC, how do we do this and do we need to send them our deed of trust or a copy? Many thanks

Hi,

If you are declaring income from property profits different from a 50/50 split as a couple, then form 17 and a deed of trust apply.

Thank you.

Thanks for the reply Admin2, In our case, the effect of the deed will be that the "beneficial interest in the property" when we sell will be 50/50, whereas the "beneficial interest in the income" until we sell will be 100/0 (my wife will run the BTL property totally separately from any joint accounts we have) - as these are different %'s can a Form 17 still be used (the notes to Form 17 say it cannot be used if you are entitled to the income in different proportions to your beneficial interest)? Or should we declare 100/00 for both the beneficial interest and the income on Form 17? And if we do this, would we have to complete another Form 17 showing 50/50 for both the beneficial interest and the income when we sell? Many thanks

Hi,

You are correct that the Form 17 can only be used if the property is owned in unequal shares and you are entitled to the income arising in proportion to those shares.

If you are in any doubt as to whether you are able to complete the Form 17 then you should seek professional advice. 

Thank you.

Hi HMRC Admin 2 the following was your response, (Posted 2 months ago by HMRC Admin 2 ) (Hi, Where there is evidence such as a declaration of trust that your friend is entitled to a share of the income, then it is not necessary for their name to be on any tenancy agreement. How you split the share of any income from the property and how you split any expenses claimed, including mortgage interest payments, against that income is a matter between you and your friend. There are no definitive rules for this.))) so my accountant is saying that income and expenses have to be split 50/50, he wants to know where can he find about the split of expenses as you have mentioned, in HMRC manual. Thank you Sazid

Hi,
 

Thank you for your question. You are correct when there is evidence such as a declaration of trust, the split of the expenses should match the split of income to reflect the declaration of trust.    see link: Work out your rental income when you let property  . Thank you.

Hi HMRC Admin 17 thank you for your response, can you enlighten in the following situation please my friend put 50% cash as his share towards purchasing investment property and i took out 50% mortgage on my name as my share. and when we create declaration of trust we put a clause that i am responsible for the mortgage payments and the mortgage is only on my name. as i am paying mortgage from my share is it possible that i can use the whole mortgage interest expense towards my tax account kind Regards Sazid

Hi,
 

Thank you for your question . The mortgage interest should be split as per the declaration, the same as other income and exp. Thank you.

Just curious by performing Declaration of trust, can you do this yourself? I have seen few available templates online, and by what is the cost involved to transfer to declaration of trust?