taxation of rental property for unmarried partners

myself and my partner(unmarried) rent out a property that we own as tenants in common in unequal shares, My question is does the rental income have to be declared on tax returns in the unequal ratio or can the income be shared 50/50 as it is a joint property?

Hi,

The share of any profit or loss arising from a jointly owned property will normally be the same as the share owned in the property being let. Joint owners can, however, agree a different division of profits and losses and so the share of the profits and losses can differ from the share in the property. You can see guidance here:

PIM1030 - Introduction: jointly owned property & partnerships

Thank you.

Thankyou. So to change the shares do I need to have some professional paperwork (deed by a solicitor) , or is it ok for me to draft out a section and get my partner to sign it, saying we're agreeing the percentages as say 90% me, 10% my partner. Basically , as long as we sign it, will that satisfy HMRC if it needs to see paperwork that we have "agreed" the split, as per PIM1030? And can I alter that % each year by drawing up paperwork and getting it signed each year? Thanks

Hi,
As per the guidance held at PIM1030 if you own a joint rental property but are not married or in a civil partnership with the joint owner then you are not required to obtain a Deed of Trust or any other paperwork.
The rental profits can be split in any way that the two of you agree.
Although it may be prudent to have a written note of the agreed split (which can be altered each year) you will not be required to submit this to HMRC in respect of your income from property.
Thank you.

Hi HMRC. I am in the same situation as the original poster. I wanted to ask if I can take 0% and give all the profit to my partner, or do I need to take some myself?

Hi Joestankaitis,
You need to be married or in a civil partnership.  
The spit is up to you but yes it can be 0% to one partner & 100% to the other.  
The split also needs to be backed up by a deed of trust.
Thank you.

 

Hello HMRC I own a rental property with a friend and am considering purchasing another with a sibling and wanted to confirm my understanding on splitting rental income for taxation purposes. After reading the guidance from HMRC this is what I understand : 1. We can decide between ourselves how we split the rental income year on year ( as we are not married or in civil partnership ) . This could be split for example Year 1 - 0% and 100% Year 2 - 25% and 75% 2. It doesn’t have to be in the same percentages as the share owned. 3. It is useful to have a signed letter each year to show our agreed share but this is not a requirement by HMRC. Thank you

Hi,

You can find guidance here:

PIM1030 - Introduction: jointly owned property & partnerships

Thank you.

Thank you HMRC for your reply and link to the guidance. I have read it again but it is still not clear on the split of income on jointly owned properties by friends/siblings for example ( I understand the position on married/civil partners ) and seem open to interpretation. So, in this respect are you able to confirm if the three statements included in my first post are correct. Many thanks

Hi, sorry I don't understand your reply, do you mean to allocate 0% to myself I would have to be married? I'm not married to my partner and we own the rental property in equal shares, the post by HMRC above mine says in this circumstance you can allocate the profits however you want without a deed of trust and seems to contradict your reply to me? Could you clarify what exactly the requirements are for unmarried partners with an equal share in a rental property please? The manual is ambiguous in this circumstance. Thanks

Hi Jean9, 

Where a property is owned jointly other than by a husband and wife, how you choose to split that income is up to you and each indiviidual is responsible for declaring their share of the income.

Thank you.

Hi Joestankaitis,

The share of any profit or loss arising from a jointly owned property is normally the same as the share owned in the property being let. As an unmarried couple, or if the property is held jointly with a friend or sibling, you can agree on different split of profit and loss. Each must declare their own share of rental income to us. No deed of trust is required and you do not need to notify HMRC of the split.

PIM1030 - Introduction: jointly owned property & partnerships

Thank you.

Thank you for confirming HMRC. Please could you also confirm if I can take 0% of the profit or I have to allocate some to myself? I'd like to give it all to my partner ideally.

Hi,

As advised, unmarried partners who own a property can agree to a different split of any profit, and, or loss.
Married couples are treated differently as it is automatically set at 50/50 unless they declare, using a Form 17 declaration, that the income is an unequal split. You and you partner are not married. Therefore, no formal agreement is required, and you can declare no profit whilst your partner declares 100%.

Thank you.

Thank you for the confirmation HMRC. In previous years me and my partner shared profits so I am registered for self assessment. Could you confirm if I still need to fill in a tax return for this year and declare 0 profit on the property or do I just not fill in a return at all any more as the profit has all been given to my partner? Thanks

Hi,

You may choose to nominate 0% of the profit to one party, with 100% to the other. There would be an expectation that any expenses should then follow the same split, 0% and 100%.

You can also contact our Self Assessment team for further advice.

Self Assessment: general enquiries

Thank you.

Hi Myself and my then partner (not married) purchased a house as joint tenants to rent out. We completed a declaration of trust at the time of purchase to say I owned 99% and my partner 1% and we're taxed on the profits in this share. We have since got married. Do I need to complete I need to complete a form 17 to remain taxed in this percentage (99/1)? If so does the income revert to 50/50 from the date of our marriage to the date I complete the form or does it back date to the date of marriage so all profits remain taxed at 99/1? Thanks

Hi Sally,
 We would advise in the event that you have entered into a marriage arragement, to declare beneficial interests via the Form 17 Declaration found here:
Declare beneficial interests in joint property and income
Shown within TSEM9860:
TSEM9860 - Property held jointly by married couples or civil partners: Form 17 rule - when declaration takes effect: normal case.
We would also state that evidential documents such as a declaration or deed of trust should accompany such declaration, submitted within 60 days of the Form 17 being signed and dated as per:
TSEM9862 - Property held jointly by married couples or civil partners: Form 17 rule - strict time limit
Thank you. 

Hi Thank you for your reply. The property is held as joint tenants. Upon reading some guidance my understanding is that this can be taxed in any split when unmarried but must be 50/50 once married. Please can you clarify if this is the case. If so does it not matter that we owned it in different shares before marriage? In either case how would I tell HMRC that we married part way through the year and therefore profits don't look like they are split in the ratio they should be ( due to pro rating). Thanks Sally

Hi Sally,
It is correct that on marriage the split of Income from Property income reverts to the default position of 50/50 automatically.
Therefore, a new Deed of Trust must submit to HMRC showing the revised split and a completed Form 17.
The declaration concerning the date of marriage and the revised split of the income would be noted on the Form17 and I assume in your correspondence to HMRC confirming the date of marriage and your notification of the split in the property income.
Thank you.