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We live and work in UK. Recently I've bought a flat, which is rented, that my wife is looking after (she left a day job to look after kids).

  • property and BTL mortgage is in my sole name
  • wife doesn't work and looks after property
  • gross income from rent is up to £6000 a year

Can she put rental income as her income only? If, yes, how could we do it?

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Usual disclaimer: I'm neither a financial nor legal professional. If in doubt, consult an expert.

I'm assuming that the aim of this exercise is to minimise the tax paid on your combined rental income. If so, there are two parts to this: transfer to joint ownership, and then inform HMRC.

Given that you already own the property and are married, the simplest change is to add your spouse as an owner, and then arrange for the property to be owned with unequal shares, your spouse having the larger share:

  1. If the property is mortgaged, your lender will need to be contacted, and your spouse added to the mortgage.
  2. A Declaration of Trust will be needed, which states that the property is owned by you and your spouse as tenants-in-common, and assigns the larger share to your spouse (e.g. 99% to her, and 1% to you). While it is possible to do this yourself, the internet tends to suggest getting a solicitor to draw it up.
  3. HMRC Form 17 must be sent to HMRC, along with a certified copy of the Declaration of Trust, informing them that you wish to be taxed on the rental income in proportion to the share of ownership.
  4. The property's details at the Land Registry will need to be updated to add your spouse, and to include the wording which implies a tenancy in common.

Thereafter, both of you will need to submit tax returns every year, declaring your share of the rental income.

Some other articles on the subject here and here.

If you buy another rental property in the future, it may be more cost effective to buy it through a company set up for the purpose.

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  • According to one of your links, you don't even need to add the spouse to the mortgage, as you can have a single legal owner but use the declaration of trust to alter the beneficial ownership. – GS - Apologise to Monica Sep 9 '17 at 14:19
  • I'd be surprised if that were true. The text at the top of Form 17 states that to be eligible, you must "actually own the property in unequal shares", which suggests that both people must be named as owners. – Steve Melnikoff Sep 9 '17 at 14:25
  • Are you referring to the sentence in the first additional article, "As the legal title at HM Land Registry does not need to be changed when transferring beneficial interests via a declaration of trust there is no requirement to advise or seek consent from mortgage providers."? If so, I believe that this only applies if a couple already jointly own a property, and just wish to change their shares of ownership. – Steve Melnikoff Sep 9 '17 at 14:31
  • I think you just don't need to use Form 17 in that case. See the "Sole legal owner" section of taxation.co.uk/Articles/2016/01/26/334258/anything-declare On the other hand apparently then you can only transfer the beneficial interest in the equity, not the whole property, so not quite sure how that works with offsetting the mortgage interest against tax etc (particularly with the new rules limiting that to basic rate tax). – GS - Apologise to Monica Sep 9 '17 at 14:55
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    Re sole legal ownership: there seems to be some debate on whether that's allowable here. In any case, it contradicts everything else I've read on the subject, and not being an expert, I think it's safer I remove that link. – Steve Melnikoff Sep 9 '17 at 15:10

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