Question: Can I transfer a chunk of rental income to my non-taxpaying wife?
My wife is a housewife with no job. I own a house in London, but had to go to Oxford for a job transfer. I rented out my London house, and rent a house in Oxford. My household has only one salary. The house deeds and mortgage are under my name. I get taxed heavily on my salary and rental income. Can I make a E17,000 transfer of rental income to wife to take advantage of her £12,000 personal allowance?
Answer: Arthur Weller replies:
Unfortunately, it is not possible to simply transfer rental income to one's wife. However, there aresome things that you could consider: (a) Put the property into joint legal names. Even if you retain 95% of the beneficial ownership, you and your wife, for income tax purposes, will be deemed to be receiving the rental income 50:50; (b) Keep the property in your sole legal name, but transfer a percentage of the beneficial ownership to your wife. Then she will be taxed on some of the rental income.