Q. Should I transfer my rental property to my wife? I own a flat which has a buy-to-let type mortgage on it. I am a higher rate taxpayer, but my wife doesn't work and doesn't pay tax. Can we arrange things so that she receives the rental income and responsible for any tax due?
A. If you want your wife to receive the income from the flat, you will need to transfer the property to her, so that she owns it. You could do this by a formal conveyancing, or less formally, by using a deed of trust, which should work for income tax purposes. Information on trusts of this nature for tax purposes can be found in the HMRC Trusts, Settlements and Estates Manual at para. TSEM9520.
You should also be aware of the stamp duty land tax (SDLT) implications here. If you transfer the responsibility of the mortgage to your wife, but the mortgage is less then £125,000, there will be no SDLT to pay. Above this amount, you will have to factor in the additional expense.
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