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Re:Jointly Owned Property

29/01/2019 11:56:25
Thanks for your question.

Just to point out, the £1000 is not an additional personal allowance. It is a trade and property income allowance and can only be used against that income. You are correct that if your rental income is below that amount, you do not have to show this on your tax return.

Please note that you cannot claim the £1000 trade and property allowance in order to create a loss.

I hope this helps.
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Jointly Owned Property

31/01/2019 08:11:46
I have a few questions about declaring income from a property.....

My sister and I own a holiday home. (50/50)
As well as sometimes doing PT employed work, I am in charge of managing / letting the holiday home and pay myself a small management fee for this. (<£2000/year).
I was told this makes me self-employed and I should submit a tax return.
I paid for a 'tax adviser' to submit my return last year with all the property stuff etc however he didn't fill in the self-employed section, he just put my management fee through as 'other income'. Is that right? So am I not actually self-employed?!
I presume I do still need to do the return as I have income from the property, but does this mean my sister should also be doing a return each year?? The business is making a profit but we rarely take money out for ourselves, just keep it in the joint account to go towards ongoing and future expenses, but does it still count as income for us both??

Also does my management fee count as a business expense AND as income for me?

Would it be better to ask my sister to give me the fee as a 'gift', rather than complicate the business accounts?

If I have a tax bill to pay can I pay it out of the (joint) business account as a business expense or is it a personal expense?

So confused by it all...
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Re:Jointly Owned Property

31/01/2019 08:51:47
Hi,

Thank you for your question.

The income and expenses should be split between you and your sister and you should each be completing a Self Assessment tax return. You say neither of you take money out for yourselves but you are making a profit and tax has to be paid on any profit, irrespective of what you do with it.

The income from the holiday let should be declared on a UK land and property supplementary page. A landlord cannot usually deduct anything for the time they spend themselves working in the rental business. The landlord is just taxable on their share of the profits which is the total income less allowable expenses. You cannot pay your tax bill out of the business accounts.

It is a personal tax bill and should be paid by you. You may wish to call our Contact Centre on 0300 200 3300. Your question is quite involved and you may be better speaking to a Technician for further advice.
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Jointly Owned Property

01/02/2019 08:14:00
Thanks for your reply. i spoke to someone for an hour... O_O

I'm close to submitting my 17/18 form but just wanted to ask a few more things I forgot to ask about...

Q1. I've been including elec payments in my expenses based on the direct debit im paying of £82/month
but I've just logged int my supplier and discovered the bill is massive and the cost works out more like £192/month!
Can I make a payment to the elec company today equal to the difference (110/month x 12 = 1320) and put it down as a a 17/18 expense and put the remaining extra as 2018/19?

Q2. How do I figure out private use adjustment... I can't understand how my tax 'adviser' last year came to his figures...
Not quite finalised my profit figure yet but say it's £4000 each (8000 total between my sister and I)
If no. of nights let is 257, no. of nights used by us (together) for holiday was 20, (no of nights available to let was 345), 10 nights were used for maintenance.... What sum do I do to reach the figure for private use adjustment??

Q3. Although I'm told I'm not self-employed..?!.. I do spend time working from home dealing with the holiday home... Can I and how do I work out an allowance for use of my home as an 'office'. Heating, lighting, internet, printer etc?

Q4. Similarly how do I claim mileage for maintenance visits? In recent years I have sometimes paid for petrol using the card from the business account - is this an acceptable way of doing it?
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Jointly Owned Property

01/02/2019 12:13:36
guessing you are probably closed for the day so i'll ask in the webinar chat

#lastminute.com!
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Re:Jointly Owned Property

01/02/2019 12:16:17
Thanks for your questions.

Apologies and hopefully you got the assistance from the webinar as well as you mentioned.

Q1 There are special tax rules for rental income from properties that qualify as furnished holiday lettings. Please see the following to see if your property qualifies;

Furnished holiday lettings: HS253 Self Assessment helpsheet

The default basis of assessment for declaring rental income is the cash basis. This means that property business income and expenses are accounted for when money is received or paid out, not on the date that income is earned or expenses incurred. More information can be found on our website under the following link;

Property Income Manual - PIM1092

General information can also be found on the notes to aid completion of the property income page SA105 at:

UK property notes

Q2 Private use is based on the number of days you are using the property in relation to the tax year.

Q3. Information regarding deductions for using part of your home for business purposes can be found at;

Property Income Manual - PIM2100

Q4 You can only claim relief for travelling expenses where the journey is solely for business and the business element is clearly defined. Where a journey has a combined business and private element, no deduction is allowable. Further information can be found at:

Property Income Manual - PIM2220
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Jointly Owned Property

11/03/2019 10:21:31
Hi,
Do we need to complete a form 17 to declare a different percentage share in ownership of a flat that we jointly rent when we live together as an unmarried couple or can we submit tax returns separately with our own percentage share of income and expenditure declared without needing to complete form 17?
Regards, Dave.
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Re:Jointly Owned Property

11/03/2019 12:50:00
Hi Dave,

You will not be required to complete a Form 17 declaration if you are an unmarried couple.

You can declare your own percentage share of any Income from Property on your own individual Tax Returns as you have stated. You can elect to split the income as you wish via a simple agreement.

I would therefore suggest that you each just notify HMRC of the percentage split on your completed Tax Return so you have a note of the split on your own tax records.

Please refer to the guidance below for further information:

PIM1030

Thank you for your question.
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Jointly Owned Property

19/03/2019 15:33:03
My Wife and I own two properties. We paid for 50% of each using an inheritance that went just to my Wife, and then a 50% mortgage that is in both our names. As such my Wife provided a greater share of the purchase funds than me. Due to the mortage repayments and other associated expenses there is little to no cash return from the rental, so profit is in terms of increasing equity rather than income which can be split.

Is that grounds to claim unequal beneficial interests via form 17?
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Re:Jointly Owned Property

20/03/2019 12:46:13
Hi,

If you live together with your spouse or civil partner, we normally treat income from a property held in joint names as if it belonged to you in equal shares, regardless of actual ownership.

You can complete a Form 17 to be taxed on any income based on your actual share of ownership. You will need to provide evidence that your beneficial interests in the property are unequal, by providing a formal declaration or deed. The following link is to the form 17 from the GOV.UK website:

Declaration of beneficial interests in joint property and income

However, you state that there is very little income arising from the property and any profit will be made when you actually sell the property. A form 17 only covers rental income arising from the property. When you sell the property, the split will revert to 50/50 for Capital Gains tax purposes. Please see the following link for when a declaration stops:

TSEM9864

Thanks for your question.
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Jointly Owned Property

27/03/2019 13:08:11
Hi,
I own a mortgaged buy-to-let and am in the higher income tax bracket. I'd like the entire income to be paid to my wife who is a non tax payer so she can take full advantage of her tax allowance.
I understand we need to complete the Form 17 , shortly after completing a declaration of Trust .
Must we also complete a transfer of equity, or is it fine for the property to remain in my name, whilst the income goes to her?
Thanks
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Re:Jointly Owned Property

27/03/2019 15:46:38
Hi,

Thank you for your question.

In order to satisfy the criteria to split property into unequal shares each party must have a beneficial interest in the property.

Therefore to complete the Form 17 you must transfer part of the equity to your wife, as Form 17 states you can use this form to declare a beneficial interest in the property, if you hold property jointly. As it stands your wife does not meet the criteria.

Information can be found in our Trust, Settlements and Estates Manual:

TSEM9000

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This message was edited 2 times. Last update was at 28/03/2019 07:29:07

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Jointly Owned Property

27/03/2019 16:47:34
Hi, that link doesn't exist.

Am I right in reading your response that the transfer of equity could be as little as say 10%? ie the beneficial interest split does not have to match the equity split?

Thanks!
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Re:Jointly Owned Property

28/03/2019 07:45:50
Hi,

Thanks for letting me know, I have now updated the above link and included it again below.

The beneficial interest split does have to match the equity split.

The guidance at TSEM9850 states that married couples and civil partners can depart from the standard 50:50 split where each spouse or civil partner is in fact entitled to a share other than 50:50 in the property and the share that a spouse or civil partner has in the income is the same as their share in the property.

The guidance can be found in the link below:

TSEM9850

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Jointly Owned Property

28/03/2019 11:22:17
Excellent response. Thank you.
Form filled in.
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Re:Jointly Owned Property

28/03/2019 13:06:48
That's great, thank you and I'm glad we could help.

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