Could someone tell me I have this correct about shared rental income?

[RJnomore1]

Hi

So if I’m doing a tax return for the first time on a property I own and rent out with my husband I get that is 50/50 income. Do I just put half the total amount on my return and he does the same?

And likewise with expenses?

Thanks! Just want to get it right.

What expenses? The expenses you can claim are minimal

You put 50% each

Yep, assuming you both own the property, you just halve the numbers.

Expenses are allowable percentage of interest on mortgage and direct letting costs so I know what I’m doing with those. Thank you @MaizeAmaze everything I’ve looked up seems to be advice on how now to split 50/50 rather than what to input.

Yes, it's 50/50 on each return. As for expenses being minimal, it depends what you've had done to the property during the tax year.

Yes. If you’re married, you put 50-50 as a default. You can make an election to be taxed on the proportions you actually own it, it different.

Make sure you know what you can expense - they are often more than you think.

For example, we claimed back for legal fees associated with setting up the BTL mortgage, professional membership fees (not related to the property but these are tax deductible so we claimed when doing our return), home working tax allowance (ditto), postal redirects, agency fees, charity giving… there is quite a bit.

Yes, you can include costs for ground rent, service charges, insurance etc against tax. You might have done some decoration or paid an agent for a management service or paid for a course about letting or paid for a membership of a Landlord association. If you use an accountant, their fees are also tax decductible.

So it’s not true to say the expenses you can claim are minimal. For some people, the expenses mean the rental income falls below the threshold and a tax return isn’t needed, but the tax can just be added to PAYE.

You can no longer deduct mortgage interest, from what I understand. Mortgage arrangement fees might be possible - there seems to be conflicting advice online.

You can get away with a multitude of expenses OP. It's almost never checked.

@PomPomsAllTheWay

You can no longer deduct mortgage interest, from what I understand. Mortgage arrangement fees might be possible - there seems to be conflicting advice online.

You can’t deduct 100% of mortgage interest anymore, it’s been replaced with a % level of relief which is being gradually reduced by the government.

www.which.co.uk/money/tax/income-tax/tax-on-property-and-rental-income/buy-to-let-mortgage-tax-relief-changes-explained-atnsv0j6j782

If a couple jointly own a btl property and one of them does not work and therefore has no income at all can all the rental income be put in that persons name?

If the rental income is below the income tax threshold does that person have to make a tax return, ie, declare it?

I’m fine on the expenses I know what I can and can’t include, honest everyone! I just. Oukdnt find anything that said how you show it all across two returns 😁 thank you all

@marmitedoughnut

If a couple jointly own a btl property and one of them does not work and therefore has no income at all can all the rental income be put in that persons name?

If the rental income is below the income tax threshold does that person have to make a tax return, ie, declare it?

No, it cant

Furnished holiday lettings can be split on a basis not 50:50 so if you or your partner is taxed at a lower rate, you can elect to split the income in a different way.

@RJnomore1

I’m fine on the expenses I know what I can and can’t include, honest everyone! I just. Oukdnt find anything that said how you show it all across two returns 😁 thank you all

Split down the middle except where expenses are wholly with one individual e.g. home working allowance, charity giving, professional membership fees etc.

Child Benefit should be declared on the higher earners tax return (according to adjusted net income when it comes to salary, I believe).

Yep if you own the property 50/50 rental income and expenses are split 50/50 you need to put 100% of anything that is just yours such as bank interest, dividends etc.

@roarfeckingroarr

You can get away with a multitude of expenses OP. It's almost never checked.

They do check - I have been audited and asked to provide all receipts.

I’m only renting 1 place , so small fry to HMRC.

The hassle when they do check (which they do completely randomly and you never know when it might be you) is honestly not worth it.

@marmitedoughnut

If a couple jointly own a btl property and one of them does not work and therefore has no income at all can all the rental income be put in that persons name?

If the rental income is below the income tax threshold does that person have to make a tax return, ie, declare it?

It depends whether they are married/CP or not. If married there has to be an outright gift in writing from the working spouse to the non working spouse and an election then has to be made to HMRC to make it effective.

For joint owners who are not married/CP they can agree income to be shared in any proportion regardless of the ownership of the property.

Regarding making an election to transfer some of the ownership from one spouse to the other - ie to shift from 50.50 to 90.10 - can this just be done with a letter or is it an official legal process that you have to pay someone to do? Thanks

@WombatChocolate

Regarding making an election to transfer some of the ownership from one spouse to the other - ie to shift from 50.50 to 90.10 - can this just be done with a letter or is it an official legal process that you have to pay someone to do? Thanks

Does it have a mortgage?

No mortgage.
Property is owned outright by husband and myself. Thanks.

Don't confuse the gift with the election. they are two separate things. This order-

1. Gift - normally under a deed. A solicitor has to draft this. They may opt to simply severe the property into fixed shares eg 90%/10%, but a solicitor should do it.

1. Election - to HMRC after 1 above. You have to use Form 17. Both sign and the form must be sent to HMRC within 60 days.

Thank you Magnited. And can I assume that no2 cannot happen without no1?

I’d be interested to know what a likely charge would be for no1.

Our small BTL generates rent of £11000. There are agency costs, ground rent, insurance etc. Usually, after all of this and the tax payment, we are looking at about £6k income between us. Saving the tax would give us an extra couple of grand per year. The question is whether it would cost more than this to do no1.

The other factor is that we might only want to do this for perhaps 5 years, when 1 partner isn’t working. After that, both would be, so shared tax liability would probably make more sense again. So I assume we would have to go through the process again and pay again. Just wondering if it’s worth it as a fairly short term step.

Thanks so much.

Even if you pay no tax on property income you still have to complete a tax return.