Belvoir Sheffield is urging married couples who are in different income tax bands to look at how they split the profits of rental properties they own together.
It was reported earlier this week by legal firm Smith & Williamson, that the HMRC is reviewing cases where buy-to-lets are owned jointly by a husband and wife but the rental profits are not split equally between them, causing Belvoir Sheffield’s director Rick Flay to warn landlords in South Yorkshire about how this may affect them.
Rick Flay, whose agency on Campo Lane in Sheffield specialises in Sheffield domestic rental property said: “This area of the law can be a minefield, and many landlords come to us wanting to know where they stand legally if they own a rental property with a partner who they are not married to, if they do or do not choose to share the actual profits.
A spokesperson from Smith & Williamson earlier this week said: “Married couples who own a buy-to-let where one partner is a higher rate taxpayer can shift the rent profit so a larger proportion is attributed to the lower rate tax payer, but this must be done legally. Married partners who own a rental property share the profits 50:50 by default, irrespective of the actual beneficial ownership ratio. This is known as “joint tenant” ownership. This can be changed if the property is transferred to “tenants in common” ownership and there is evidence to support the claim for unequal beneficial ownerships, such as a declaration of trust.”
Rick added: “Tax can be a confusing issue for landlords and I would suggest that anyone struggling to understand their obligations, to get in touch with us for a free meeting to go through what is expected of them and for specific tax advice they should talk to an accountant.
“It is a fantastic time to rent a property or to embark upon a portfolio building project, providing that you stay the right side of the law and ensure that you are fully informed about your responsibilities.”
Belvoir Lettings Sheffield is the One Stop Specialists for Lettings including Property Management, Tenant Find, Investment and Wealth Management Advice, Fit-outs and Renovations, Furniture Packs and Investment Property Insurances and Mortgages.
