Question:
Our house in multiple occupation (HMO) is going to incur large losses in the first year, and these can be claimed back through sideways loss relief. We have been told that my husband can claim solely for this (he is a higher rate taxpayer) and rental income going forward can be in my name only (I pay basic rate). We have also been told we do not need to complete a declaration of trust, as we can just write a letter to each other expressing our wishes. This seems too easy!
Arthur Weller replies:
If I understand you correctly, your husband is claiming all the losses sideways (see www.hmrc.gov.uk/manuals/pimmanual/PIM4220.htm) because he is currently the sole owner of the HMO. The intention is that all future rental income profits will be yours only; this can only be if he transfers 100% of the beneficial ownership of the property to you. In order to do this, you will need a written declaration of trust – (see www.hmrc.gov.uk/manuals/tsemmanual/TSEM9520.htm).
