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Jointly Owned Property

02/08/2018 08:15:01
We often receive questions about the tax due on property income where there are joint owners of a property. If this applies to you, hopefully this information will help you understand what you need to do.

If the joint owners of a property are husband and wife or civil partners, any profits and losses are treated as arising to them in equal shares. This is known as the 50/50 rule.

If both entitlement to the income and the property are in unequal shares, a form 17 election can be made to allow profits or losses to be split according to their actual share of ownership in the property. For further information, please see Declare beneficial interests in joint property and income

Where you jointly own a property with another family member, for example a brother, usually, rental profits are split between the owners in the same proportion that the properties are owned.

Joint owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property. The share for tax purposes must be the same as the share actually agreed.

There are specific rules about property held jointly by married couples and civil partners. For further information on jointly owned property, please see Property income manual 1030

If you jointly own the property with someone else, usually, there won’t be a partnership. Your share from the jointly owned property will be included as part of your personal rental business profits. For further information on jointly owned property, please see Property income manual 1030 .

This message was edited 1 time. Last update was at 02/08/2018 14:54:17

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Jointly Owned Property

26/09/2018 09:16:52
I am joint owner of a buy to let with my husband. He is in full time employment and has previously informed the tax office and they have adjusted his tax code. Does he need to let them know again now that the new rules of 2017-18 have come in terms of the profit being gradually reduced up until 2020. Will this affect his tax code? I am unsure as to what happens. I fill in a self assessment form. Thanks
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Re:Jointly Owned Property

26/09/2018 10:09:12
Hi,

Thank you for your question.

Your husband should let us have details at the end of each tax year of his share of the rental income and expenses so that we can ensure we have had the right restriction in his tax code. From 2017-18 onwards, he should let us have details of his share of the gross rents received in the 2017-18 tax year, the expenses claimed and the total finance costs. We will work out what the correct restriction should have been for the previous year and send a calculation as necessary. We will also update the current year tax code based on the information provided.

Hope this helps.
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Jointly Owned Property

26/09/2018 10:27:12
Hi

Thanks for you reply, I really appreciate it and will need to process the information you have given me. Will he need to ring HMRC? I know he has contacted them in the past, is there a particular number? When you say total finance costs, do you mean his share of the interest only mortgage, which is now being gradually reduced? Thanks again
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Re:Jointly Owned Property

26/09/2018 11:34:28
Thank you for your question. Your husband can call our Contact Centre on 0300 200 3300. He should just tell us about his share of the interest. You will show your share on your tax return.

Hope this helps.
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Re:Jointly Owned Property

26/09/2018 11:39:37
Hello,
I jointly own a property with my husband. Now that the new rules have come in for 2017-18 about the interest on mortgages I am unsure as to how this will affect my husband's tax code in respect of whether he has to inform HMRC if there is a bigger profit because of it (there isn't this year). I fill in a self assessment. If he does have to inform them, how does he do it, who does he ring because I know the lines get really busy. Thanks
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Re:Jointly Owned Property

27/09/2018 07:42:18
Hello,

Thanks for your question.

If we include a deduction in your tax code to collect tax due on rental income, this is normally based on the previous year’s figure of assessable rental income. The position would be reviewed at the end of the tax year when actual details are known.

However, if you wish for us to update your tax code during the year you can contact us either by phoning us on 0300 200 3300 or writing to us at PAYE and Self Assessment, HM Revenue and Customs BX9 1AS.

Further information regarding relief for mortgage and finance costs can be found using the link below.

Income tax when you rent out a property: working out your rental income

Hope this helps.
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Jointly Owned Property

27/09/2018 15:47:30
Hi HMRC Admin 50,

Re 50/50 rule for spouses and form 17 election, does this apply to separated couples? Do separated spouses need to make the election in case their beneficial ownership is unequal?

Thanks.
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Re:Jointly Owned Property

27/09/2018 15:49:10
Hi Christina,

Thank you for your question.

The 50/50 rule for spouses and civil partners and form 17 election only applies to couples living together. For tax purposes a couple are treated as living together unless they are separated under an order of the court, deed of separation or are separated in circumstances in which the separation is likely to be permanent.

More information can be found on our website under the following link:

Trusts settlements and estates manual

Hope this helps.

This message was edited 1 time. Last update was at 27/09/2018 15:49:44

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Jointly Owned Property

02/10/2018 16:10:05
Hi
I have a rented property that has just become mortgage free(bought before I married), so would like to finally add my wife as a joint owner, once this is done will I be able to split the income between us both, and will I need to complete any forms to inform you of the change?
Cheers
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Re:Jointly Owned Property

02/10/2018 17:18:04
Hi,

Thank you for your question.

Property jointly owned by married couples or civil partners who live together is taxed in equal shares. Once your wife becomes a joint owner you can split rental profits and losses on a 50/50 basis. You do not need to complete any forms unless you decide to split ownership differently. If you own the property in unequal shares, and are entitled to the income in the same unequal shares, the income can be taxed on that basis.

For further information, please see the link below.

Declare beneficial interests in joint property and income

Hope this helps.
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Jointly Owned Property

03/10/2018 07:44:18
My husband and I own a rental property that is now unmorgaged. I have never had anything to do with it and my husband completes a tax form each year and declares all income from rental. As I am now retired (for last 5 years), it would probably be beneficial for us if I were to declare the rental income. Can I do this and would i then have to complete a self assessment? I have small private pension, under tax limit. Thanks.
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Re:Jointly Owned Property

03/10/2018 13:03:05
Hi,

Thank you for your question.

You have stated that you own a rental property with your husband but have not had anything to do with it so far. As you have not confirmed whether the property is currently jointly owned I would advise you that when a property is jointly owned by married couples or civil partners who live together the income is taxed in equal shares.

If you want to change the way in which the rental income is allocated between you the requirement will be for you to submit evidence of this and you will both need to submit a ‘declaration of trust’ in respect of the property. A declaration of trust is a simple form of trust deed, which states that although the legal title is owned by one or both of you, the beneficial interests (i.e. the right to receive income) are held by the party wishing to declare the income on their tax return. The declaration of trust should be signed by both of you.

This will then make it possible for you to declare the property rental income as belonging to you so as to make use of your personal allowance and marginal tax rates. You would then be required to register for Self Assessment and complete a Self Assessment tax return.

Please note that this should be submitted together with a Form 17 Income Tax Declaration Form. I have included the website details of the Form 17 below:

Form 17

I have also provided details of other websites you may find useful:

Trusts settlements and estates manual

Jointly owned property

Hope this helps.
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Jointly Owned Property

03/10/2018 17:14:37
Thank you! As stated, the property is in both names but was purchased by my husband with a small inheritance and he deals with it all. I will do as you suggest and action form 17 and declaration of trust. Hopefully my self assessment will be straightforward!
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Jointly Owned Property

09/10/2018 11:10:46
We have a lodger living with my wife and I in our jointly owned house. The respective income to each of us is about £3300.
Do I need to declare this income in the Property section of my Self Assessment return and if so, do I tick the Rent-a-room relief box?
Thanks.

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