TIP OF THE WEEK 2: Using your spouse to save property tax.

Another top tip from Stephen Fay - the property investor's accountant. Please feel free to contact Stephen, who is on hand to answer any more detailed questions - his email is stephenfay@fyldetaxaccountants.co.uk

Using your spouse to save property tax:

Jointly owning investment property with a spouse can generate
substantial tax savings for married couples (and Civil Partnerships).
This is mainly because several important tax reliefs and tax bands are
available on a per person basis e.g. the personal allowance & the
basic rate tax band. This is especially useful where one spouse is in
a different tax band to the other, or if a spouse does not use up
their personal allowance.

It is possible to have any split of beneficial ownership for
properties owned jointly as Tenants In Common (it is easy and cheap to
switch properties held as a Joint Tenancy to a Tenants In Common basis,
the change does not incur capital gains tax).

Changing the beneficial ownership of a property means that rental
income and profits can be shared in a different way to the legal
ownership of the property.

This then means that income tax is charged on the profits according to
the agreed split, and not on a 50-50 basis. Couples need to jointly
elect for the income to be split in accordance with the beneficial
title in the property.