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Allocation of rental income

This time last year there was some discussion about whether the rental income from a jointly owned house (owned by a husband and wife and joint tenants) could be allocated entirely to the wife so as to more efficiently use her tax allowances.

The conclusion was that the income could only be divided in the same proportion as the actual ownership of the house so this should be adjusted to the optimal proportions.

If the house is owned as 'joint tenants' then no proportion of ownership is defined in the deeds so I presume the IR would regard it at 50:50. To change this, is it sufficent that the husband writes to the wife and gifts an appropriate share to her and that he writes to the revenue to say that he has done so?

Robert

Reply to
Robert
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I would say there's two elements to the rental profit. One is a return on the investment in the house, which should be split in the same proportion as the house. The other is payment for the work carried out in running the rental business, and this should be split in the proportion of work done. On the partnership accounts, you would show this as a partner's salary, but both are treated as profit share for tax purposes.

There may be stamp duty implications.

Reply to
Jonathan Bryce

Yes, whilst I have no evidence, I understand there is no problem in dividing the split in capital again differently to the split in income.

Reply to
John Boyle

Thank you for your comments gentlemen. I imagine there would be no stamp duty if the tranbfer was a gift, but I need to check this.

Robert

Reply to
Robert

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