Putting house into husbands name for tax reasons?

[Hellenabe]

Thankfully not for me but a friend is debating this as she's on a higher tax bracket. Could anyone offer any thoughts? He doesn't work much, they have children

We'd need to know a lot more to comment. There must be other properties or this would not come up? Is this in England?

Not enough information there.
Where do they live?
What tax specifically are they hoping to avoid?

I soley own our rental property as I'm a lower tax band than DH.
We jointly own our residential home.

Sorry, its in London. This was originally their home but are living elsewhere with elderly parents. Home is being rented out.

Oh right, for reasons of tax on rental income and I guess CGT when they sell.

sure, makes sense to me.

Wouldn't there be stamp duty if they passed ownership direct to him? And isn't that tax avoidance - havent HMRC closed that sort of loophole?

It does make sense from a tax perspective if he’s a lower earner. Alternatively they could just declare a change of beneficial ownership to another proportion (eg. 99%/1%) and then split the rental income accordingly.

www.gov.uk/government/publications/income-tax-declaration-of-beneficial-interests-in-joint-property-and-income-17

It’s definitely not tax avoidance, it’s commonly done.

Your friend needs to pay for proper legal advice on this.

My husband works and I am a SAHM. We bought a small buy-to-let and everything is in my name only. As I don’t have another income I have my personal tax free allowance of £12,570. So it means any profit we make renting it, we don’t pay any tax. Were it all in my husbands name, he would have to pay tax on any profit. All perfectly legal and makes good sense.

It makes sense for tax purposes, but the other implications are he could will it to someone else, sell it and do whatever with the money, give it away. In divorce it still counts in the joint assets but outside divorce he can do whatever he wants with it if it's in his sole name. Whether that's concerning would depend on a whole heap of other things, it comes down to if he's a decent person, if she trusts him and if he is worthy of that trust.

This. Without her husband's knowledge.

Do they own it outright? Is she on the deeds if they do, or the mortgage if they don't?

Tax avoidance is legal.

Added to this, the house was bought with her money/her side of the family. He contributed very little. He's a decent person but you never really know.

Yes I know (I’m a tax adviser). This is tax efficiency, it’s not avoidance.

No stamp duty as no actual consideration paid. And no tax avoidance issues either. No cgt on transfer as spouses take on the original cost.

It does need to been done properly though with title passing legally and could have issues if spouses divorce down the line.

They always appear to be decent people. You could be writing my story, OP. I stress again your friend should take legal advice without her husband's knowledge.

Nothing wrong with tax avoidance.

It's tax evasion thats illegal.

Jesus no.

She needs to protect herself by keeping her property and pay the tax to the system she's living in and benefitting from.

There will be stamp duty payable if there is a mortgage.

I think the unequal ownership is the best solution. Then she still keeps some ownership so he can't sell it without her knowing about it.
They need some professional advice because they will get different answers depending on if they are trying to minimise tax on rental income or tax on capital gain.

The ultimate answer, though, is to be sensible. No point saving a little bit of tax if she potentially could lose a whole house! You don't want the tail wagging the dog.

It's a change in beneficial interest.
If she is sole owner needs a deed of trust declaration or if he's a joint owner form 17.
It doesn't need a change at land registry or change of ownership

@Christmascracker0 whats the difference between tax avoidance and tax efficiency?

I always thought ISA’s, tax relief on pensions etc. was legal tax avoidance are you saying it’s tax efficiency?

Avoiding tax you should pay is not acceptable. So lying about your income, not declaring dividends etc. Being tax efficient is using the legal avenues to reduce tax liability. Eg saving for a pension, ISAs, giving money to charities and other efficiencies are legal and make good sense.

In general, tax avoidance is using the legislation in a way it wasn’t intended for and in doing so gaining an advantage.

Tax evasion is illegal and is when someone deliberately avoids paying tax.

Like pp said, ISAs, pension contributions, marriage allowance, all that is tax efficiency and perfectly above board 😊