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How to set this up......


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Hi,

 

Many thanks for the welcome i received on my intro post!! As mentioned I need some advice please on how to set up our first Landlord agreement / structure.

 

So we have our first BTL property and we have been fortunate to finance it as a cash buy by pooling together funds from myself and Wife and my Wifes parents. We are now about to Let it out but I am wondering who is the actual landlord from a tenancy agreement perspective?? Legally we each own 25% of the property so that is where i am a little confused and I may be over complicating it??

 

Or should we set up a new company and approach it that way?

 

As mentioned I may just be over complicating matters but i would really appreciate some advice on how to structure this one please!!

 

Jason.

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Hey Jason, I'm not an expert but my understanding is that all legal owners should be listed as the landlord on the tenancy document. Then to save a load of faff every time you have to sign something, you can set up a signed agreement between the four of you that any one (or two) of you can sign for all parties.

 

Hopefully you'll get another opinion though!

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I recently had my accountant throw a spanner I the works......

Apparently if you own a property jointly (myself and my wife are the owners of one of our BTL's) the income (profit) must be shared equally amongst the owners. This will effect your tax return of course!

I wasn't taking any profit from the property for a couple of years so had a lot of re jigging to do to straighten out the debt with the tax man. (We are in different tax brackets so it was a bit of a pain in the cushioned bit!)

You may already know this but thought I would mention it use in case!

Sam.

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I recently had my accountant throw a spanner I the works......

Apparently if you own a property jointly (myself and my wife are the owners of one of our BTL's) the income (profit) must be shared equally amongst the owners. This will effect your tax return of course!

I wasn't taking any profit from the property for a couple of years so had a lot of re jigging to do to straighten out the debt with the tax man. (We are in different tax brackets so it was a bit of a pain in the cushioned bit!)

 

Sam - it might be worth you getting another opinion, because I think (although I'm far from an expert) that it's possible for a married couple to set up different beneficial ownership shares and apply to be taxed based on these shares rather than 50/50. If you're feeling particularly masochistic or are having trouble sleeping, you can check out http://www.hmrc.gov.uk/manuals/tsemmanual/TSEM9800.htm

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Thanks Rob,

I am going to contact the accountant mid tell him he's rubbish!!! I looked it up on the link you kindly supplied (had trouble sleeping!) and it looks like we would be able to set it up with my wife getting the income.

Great tip! Thanks.

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  • 3 weeks later...

Hi.

Interesting discussion on income received & how it's split between owners.

 

My better half & myself have recently dipped a toe in to BTLs.  As we're not married and my income is lower than hers, we were going to see whether the rent could be put against my income.  We are going to talk to her accountant about this BUT as Sam White has found, not all accountants are fully conversant with BTL tax regs.

 

I recall a Property Geek podcast which touched on this matter, which is where I got the idea from.

 

Any thoughts on this as unmarried, cohabiting couple?  Would be useful to have some information to give the accountant a nudge.

 

Cheers.

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Hi Jason,

 

I also agree with other members here that this can be done and you can nominate your wife to receive for example 99% of the income and you can receive 1%.

 

Please note that normally this should be done at the time of buying the property and before it is let out. I enquired about this couple of years back with my accountant (who himself has lots of properties) and was told that if you do this, then typically the HMRC will want to apply the same proportion to calculate the capital gains at the time you sell the property. They won't allow you to let your wife have all the rental income (to save tax) and then when you sell the property then you divide the profits between the two equally. 

 

Make sure that you check this properly otherwise you may not be happy when you sell the property !!

 

Kind Regards,

 

Ravi M.

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