Unequal shared ownership

Landlord Discussion Legal
1

In 2007, before we met, my wife bought a flat. She has always maintained sole ownership of it since we married. This has benefitted us in terms of tax as I am a higher rate tax payer.

Since COVID19 and having 2 children we are now in a temporary period where she is not working. We have made this decision to avoid costs of childcare and unavoidable absences etc.

We want to remortgage. As she no longer earns a salary, can anyone confirm if it is acceptable for us to set up a declaration of ownership where she owns either the full 100% or a 95%/5% split?

This would ensure she still maintains it as ‘her’ property but we do not get heavily taxed due to ky income.

I hope this makes sense.

2

You have to speak to a Solicitor about drawing up a deed of trust to vary the beneficial ownership to 99%/1% or whatever other proportion you choose. Whether its possible may depend on the way you own the property, but they should advise you of that without charge. Once the deed is executed you have a set time to notify HMRC using form 17 so that you will each be taxed accordingly. Clearly you mortgage lender(s) would have to be aware and agree.

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3

I don’t think you need to inform your lender. You are both named on the mortgage. You are both legal owners. How you decide to split beneficial ownership (rental income) is your business not the lenders’.

If your ownership is tenant in common (not joint tenants) , you can change the beneficiary split as many times as you want. Submit form17 and a deed of trust. If you want the split to be 100% : 0%, it’s possible (speak to Hmrc landlord team to confirm), you need to submit declaration of trust plus form 17.

I will drop a template here when I get home. Ping me if I forget to drop it.

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4

I think that the lender would have concerns if the person with the mortgage no longer had a controlling interest in the property.

5

Hi there,

Just came across this thread and wanted to give a nudge for the template you mentioned.

We are in a very similar position as the OP re making a change to our beneficial ownership…

Thanks in advance — really appreciate the help this forum provides to new (and accidental)
Landlords such as myself.

Regards
Ella

6

If you are not married, you can choose how you split the income.

If you are married, then the default for jointly owned property is 50/50. If your actual share is different, you can elect to split the income according to your actual shares, but I think HMRC would be suspicious if those shares kept changing in accordance with your tax situations.