Transferring Rental Income to Wife (Deed of Assignment)

Hello All, I am a sole owner of a rental property. I would like to assign 80% of the beneficial interest to my wife (who is unemployed at the moment) by using a deed of assignment i.e. 80% the rental income will go to my wife. I will continue to receive the rest (20% of the rental income). I also have a mortgage on the property which is in my name. 1. Can I continue to benefit from 20% mortgage relief by netting off the 20% rental income against the mortgage relief? 2. Barring income tax, are there any capital gains, SDLT or other tax implications from using the deed of assignment? I would appreciate any feedback you may have to this. Kind regards, Mark Steed

Hi MarkSteed,

You should submit a form 17 with a valid declaration of trust stating the percentage split.
This should be signed by both yourself and your wife. See TSEM 9230 TSEM9230 - Ownership and income tax: legal background: joint ownership - presumption of joint tenancy.
Relief on interest from a mortgage can only be made by the person who takes out the loan, pays the interest on the loan and applies from the loan in a form that meets the qualifying conditions.
This is explained in the savings and investments manual SAIM10030 SAIM10030 - Relief for interest paid: general conditions: the claimant.
There is no capital gain when a property is transferred between husband and wife.
This is at a no gain/no loss stance. See CG22070. CG22070 - Transfer of assets between spouses: definitions.
Regarding stamp duty please call 0300 200 3510.

Thank you.

 

Hi - as I stated the property is solely in my name. Is form 17 required? Wouldn't the deed of assignment be relevant here? Following the reassignment of beneficial interest, if I receive only 20% income and I transfer 80% rental income to my wife. Can I still seek relief on mortgage interest?

Hi
Thank you for your question.
As the property in question is solely owned by yourself, I would adivse that a Form 17 would not suit your personal situation, as this would only be necessary if the property was jointly owned.
I would advise to submit either valid Deed of Assignment/Trust in order to reflect the reassingment of beneficial interest in said property.
As stated in the previous response, only the party who incurs the mortgage costs, and pays the interest may claim the mortgage interest as set out in SAIM10030. 

Hi - thank you for coming back to me. This makes sense. I (the husband) am one who is incurring the mortgage costs and I pay the mortgage interest however as stated 80% of the rental income will be assigned to my wife using the DOA. Can I continue to claim mortgage relief as a part of my self assessment against the 20% rental income I will continue to receive?

Hi
Thank you for your question.
You can claim 20% of the mortgage interest against the 20% rental income you will receive.
This is held within the savings and investment manual reference 10030.
Relief for interest paid: general conditions: the claimant

I have a property on my name, but I want to rent out the place. But want to move 100% of rent income to wife by deed of assignment. But to be able to claim mortgage interest. I want to add wife to the title deeds and then will she be bale to claim full interest on mortgage as welll?

I would like to ask a question which I don't think has been asked above. I own a rental property solely in my name and would like to split the income evenly between my wife and I on our tax returns. I believe that if I did a deed of assignment and transferred say 5% to my spouse then for tax purposes the income would default then be split 50 50 between my wife and I (as long as we do not submit a form 17). Would I then be correct that my tax return could continue to claim relief for 95% of the mortgage interest but my wife would not get any relief for the interest or would she be able to claim relief for 5% of the mortgage interest from her 50% share of income? All of the questions above seem to want to split the income in a different split to 50 50.

Good afternoon I would like to ask i own 2 rental properties both properties are in my name only , i would like to keep the the properties in my name only but because my wife works only 18 hours per week and would like to pass the rental income to my wife. Thank You

Hi, I have the same question as Philip Silvey, can I transfer beneficiary interest of more than one property to my wife's name. both properties are solely in my name

Hi
 

Philip Silvey ,   Thank you for your question. If you are looking to transfer the beneficial interest of the rental income to your wife without changing the legal title, then I would advise looking into creating a declaration of trust. Please see attached some guidance which may be useful: Trusts, Settlements and Estates Manual  . Thank  you .

Hi,
 

Thank you for your question. Looking at your question, I believe you may have misinterpreted the guidance. Would you be transferring 5% of the property or 50% to your wife as both have been specified? From my understanding, you solely own a rental property and wish to split the income evenly with your wife, meaning a 50/50 split. By completing a Declaration of Trust, this is a legally binding document, provided that it meets the necessary legal requirements and usually holds a statement by the legal owner transferring beneficial interest to another party, but not the legal title. A form 17 would only be applicable if you were to hold unequal shares in the property, which from your question does not seem to be the case. If when competing the Declaration of Trust, you transfer 5% of the beneficial interest to your wife, then you are correct your Tax Return would reflect 95% of the interest, to 5% in your wife’s Tax Return in terms of both rental income and expenses incurred. In terms of mortgage interest, SAIM10030 outlines that relief may only be claimed by the person/parties who took out the loan/ pays the interest on the loan, so this depends on the terms when the mortgage was initally set up. For your own convenience, I have attached SAIM10030 which does offer further information on Joint Loans: Savings and Investment Manual  . Thank you.

Hi besart k,
Thank you for your question.
Please refer to:
TSEM9520 - Ownership and income tax: express trusts - written declaration
Which provides further information about transferring the beneficial interest of rental income, which can be done with more than one property.
Thank you. 

Hi HMRC Admin 25, There are some posts which state a Deed of declaration is sufficient to transfer beneficial interest to your Partner. Here it is stated that a Declaration of Trust is needed to transfer beneficial interest for rental income. So which one is legally accepted by HMRC?

Hi,

Thank you for your question a declaration of ownership on Form 17 must be accompanied by eveidence that the property is actually owned in the shares shown on that declaration.  Examples of what is accepteable eveidnce can be found in our Trusts & Estates Manual at : Trusts, Settlements and Estates Manual   . Thank you.

HMRC admin: Thank you for your comments but I am still unclear. I own a property in my sole name and intend to transfer 5% by deed of assignement to my wife. I do not intend to complete a Form 17 and therefore my understanding is that the rental income is split 50:50, even though our beneficial ownership is 95:5, as we are married. As the property was purchased by myself with a mortgage will the interest relief then be split with my wife 50:50?

Hi

In terms of mortgage interest, SAIM10030 - Relief for interest paid: general conditions: the claimant - HMRC internal manual outlines that relief.
This may only be claimed by the person/parties who took out the loan/ pays the interest on the loan, so this depends on the terms when the mortgage was initally set up.
So if the mortgage is solely in your name all the relief would be claimed by you.

Thank you

I am looking for guidnancy on splitting rental income with my wife: The details are as follows: 1. Property Ownership: I am the sole owner of the property, which also serves as our primary residence. The property is currently rented out to tenants. 2. Mortgage Status: I am the sole individual listed on the mortgage and responsible for repayments. 3. Marital Status and Living Arrangement: My wife and I have been married since October 2020 under UK law. We are presently living with my mother-in-law, to whom we financially contribute. 4. Income and Tax Bracket: I am a higher-rate taxpayer. On the other hand, my wife has no personal income. Some accountants have advised me that a Deed of Trust would apply and others that a Deed of Assignment would be appropriate given I already own the property. Are you able to advise which is the most appropriate for this? I would have the rental income paid to my wife's personal bank account and she would retain 50% as this is her beneficial interest but also remuneration for managing the property. She would pass the other 50% onto me for my share of the beneficial interest. Is this the correct approach? I plan to deduct relevant allowable expenses and mortgage interest from my share of the rental income. My wife does not currently contribute to the expenses or mortgage so she wouldn't be in a position to deduct any expenses or receive any credit for interest costs. is that correct? No form 17 would be required as we are splitting the beneficial interest and rental income 50:50? Is this correct? If you could kindly let me know that this would be the correct approach to enable us to split the rental income. Your assistance would be greatly appreciated.

Hi,
As you are the sole owner of the property, and from the information provided within your query, you are looking to transfer 50% of the rental income beneficial interest to your Wife.
If this is the case, we would advise that the Declaration of Trust would be appropriate as the Deed of Trust would include transferring legal title to wife, whereas the Declaration would only transfer beneficial ownership of income/expenses whilst retaining legal title.
As to where the rental income is sent to is not a matter for HMRC, only beneficial ownership and entitlement to that income.
As you are the sole payer of the mortgage, we would advise only yourself would be able to claim any mortgage interest payments.
As the sole owner of the property, the Form 17 would not be applicable as this only applies to properties held in joint names.
Thankyou.
 

Thank you for your response. You mention a Declaration of Trust would be appropriate - Would a Deed of Assignment also be accepted by HMRC?