Buy to Let, transferring ownership

[ray_li30]

Hi,

I know there are a few knowledgeable people on BTL on the forum so I looking for a sense check.

The aim is to lighten my tax burden by transferring the rental income for a property I own in my sole name to my wife. The property does have a mortgage on it (£220k), and my accountant has advised this should be done via a declaration of trust. For the privilege they are charging me c£2k plus they have said as the property has a mortgage outstanding there will be SDLT to pay! They have yet to confirm the amount, but with the SDLT plus the £2k they are charging it doesn't seem like a worthwhile exercise anymore. Anyone tried to do something similar or any accountants out there care to offer an alternate opinion?

Thanks

[David_D]

Hi,

I know there are a few knowledgeable people on BTL on the forum so I looking for a sense check.

The aim is to lighten my tax burden by transferring the rental income for a property I own in my sole name to my wife. The property does have a mortgage on it (£220k), and my accountant has advised this should be done via a declaration of trust. For the privilege they are charging me c£2k plus they have said as the property has a mortgage outstanding there will be SDLT to pay! They have yet to confirm the amount, but with the SDLT plus the £2k they are charging it doesn't seem like a worthwhile exercise anymore. Anyone tried to do something similar or any accountants out there care to offer an alternate opinion?

Thanks

Transferring a mortgaged property is, unsurprisingly, more complicated than transferring one mortgage-free. Have you approached the lender about the plan? I think SDLT arises because (assuming it's allowed) your wife is deemed to be paying you for the property by assuming the mortgage liability. The SDLT (calculated on the mortgage balance) will be with the 3% premium rate if your wife is on the deeds of your home.

Don't quote me but is an alternative to transfer legal ownership of a small % to your Mrs (minimal/nil SDLT) and then do the DoT and Form 17 notification to the effect that the beneficial ownership is 99.9% her and 0.1% you?

https://www.gov.uk/government/public...-and-income-17

An accountant shouldn't (AFAIK) be drafting a DoT as it's a legal document. They sure as hell shouldn't be charging you £2,000! Is that for the supposed tax advice as well as the DoT itself?

Don't rely on this as it's a bit of a mash up of stuff I have read but it may provide food for thought.

[Dave+63]

Why don’t you just account for the money as your wife’s income or alternatively have your wife invoice you for managing the property?

There’s really no need to transfer ownership with all the associated costs.

[David_D]

Why don’t you just account for the money as your wife’s income

Yikes! Because it isn't his wife's income and he would be guilty of tax evasion!

alternatively have your wife invoice you for managing the property?

She could earn a commercial amount for activities she actually undertakes but that still leaves the OP with the bulk of the income.

There’s really no need to transfer ownership with all the associated costs.

Depends on the precise facts but if the OP wants the income to be his wife's for tax purposes, there is no free way of achieving that.

[Gav]

Form 17 with Declaration of Trust. See the link below.

https://www.gov.uk/government/public...-and-income-17

[David_D]

Form 17 with Declaration of Trust. See the link below.

https://www.gov.uk/government/public...-and-income-17

Yes, that’s for jointly owned property. The OP’s property isn’t yet jointly owned, if I’ve understood correctly.

[ray_li30]

Correct, it owned in my sole name, so the straight forward route of form 17 doesn’t work.

Yes, that’s for jointly owned property. The OP’s property isn’t yet jointly owned, if I’ve understood correctly.

[ray_li30]

Don't quote me but is an alternative to transfer legal ownership of a small % to your Mrs (minimal/nil SDLT) and then do the DoT and Form 17 notification to the effect that the beneficial ownership is 99.9% her and 0.1% you?

An accountant shouldn't (AFAIK) be drafting a DoT as it's a legal document. They sure as hell shouldn't be charging you £2,000! Is that for the supposed tax advice as well as the DoT itself?

Thanks David. I will look into the small legal transfer of ownership route. I should have explained the £2k fees is all inclusive of legal fees which still seem rather steep to me!

[sevvy]

Is your wife owner or part owner of another property (including marital home)? If she is and you transfer with a consideration greater than £40k then it’s likely an additional 3% SDLT will be due on top of normal SDLT

[ray_li30]

Yes she is, the more I looking at this the less appealing it becomes!

Is your wife owner or part owner of another property (including marital home)? If she is and you transfer with a consideration greater than £40k then it’s likely an additional 3% SDLT will be due on top of normal SDLT

[Robsmck]

Even if your wife's name is notnon the deeds of another property the issue around stamp duty is a little blurred AFAIK, do your homework carefully before deciding your course of action.

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