A married man owns 100% of a rental property. He and his wife then move house and let out their old home, which is in joint names. He is a 40% taxpayer so they sign a declaration of trust and Form 17 giving 99% to her. There is a mortgage. With regard to joint costs like insurance and maintenance, it would still be worth splitting these 50:50 going forward. HMRC’s manual seems to suggest that profits should be split in line with form 17, but form 17 itself only refers to income, so it seems to me a husband and wife are at liberty to split joint costs any way they choose, just the same as unmarried couples. What is your view please?
Arthur Weller replies:
See HMRC’s Savings and Investment Manual, which states: 'Where a husband and wife take out a joint loan but only one spouse uses the loan in a form that meets the qualifying conditions, that spouse would be entitled to full relief on the relevant amount of interest paid, even if the joint liability is satisfied out of a joint account.
Where a husband and wife take out a joint loan, with the liability to pay interest on the loan being paid from a joint account, and both use the loan in a form that meets the qualifying conditions, each spouse would be entitled to relief on the interest paid in proportion to their relevant qualifying investments.' So it could be argued that since now 99% of the investment is being made by the wife, she can claim 99% of the mortgage interest paid.