Can I gift a property to my wife so that she uses up her 20% tax band?

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Premos

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If a property is jointly owned, can there be only one landlord in terms of revenue? I own an apartment with my husband. In terms of taxes, it would currently be more beneficial for me to be the only landlord. Can this be done? If so I would think that the lease need to be in my name as well as the rtb registration. Is that the case?
 
Your husband could transfer the property to you tax free (you would incur solicitor's fees though and you would need to check what your will situation is). Alternatively, he could just waive his right to the rent for a number of years meaning it is all yours (again, a solicitor should draw up this document). Again, no tax on his 'gift' of the income to you.
 
Greenbook said:
Your husband could transfer the property to you tax free (you would incur solicitor's fees though and you would need to check what your will situation is). Alternatively, he could just waive his right to the rent for a number of years meaning it is all yours (again, a solicitor should draw up this document). Again, no tax on his 'gift' of the income to you.
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Thank you.
 
Greenbook said:
Your husband could transfer the property to you tax free (you would incur solicitor's fees though and you would need to check what your will situation is). Alternatively, he could just waive his right to the rent for a number of years meaning it is all yours (again, a solicitor should draw up this document). Again, no tax on his 'gift' of the income to you.
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Wouldn't both these actions fall within the definition of artificial transactions for the purposes of general anti avoidance legislation?

And wouldn't the first one turn out to be a disastrous move if anything unexpectedly happened @Premos ?
 
T McGibney said:
Wouldn't both these actions fall within the definition of artificial transactions for the purposes of general anti avoidance legislation?
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I’ve never read the legislation or guidance but always assumed that if a property is owned 50/50 then the rental profits should be 50/50 for tax purposes.

Perhaps a different split if one partner is entirely passive and the other does the active management.

But for a married couple with a jointly-owned property I can’t imagine how you would plausibly assign all income to one spouse.
 
This has always been the way we have done it and I always assumed that this was the only way to do it. However reading some other thread I wondered if we were wrong and if there was something we should do differently.
 
NoRegretsCoyote said:
I’ve never read the legislation or guidance but always assumed that if a property is owned 50/50 then the rental profits should be 50/50 for tax purposes.

Perhaps a different split if one partner is entirely passive and the other does the active management.

But for a married couple with a jointly-owned property I can’t imagine how you would plausibly assign all income to one spouse.
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Yes, but all depends on the circumstances and it's impossible to advise properly without knowing all the background details. That said, the advice that one spouse should transfer their share to the other was crazy.
 
Hi Tommy

I thought it was part of wealth planning for (usually) a husband to transfer shares or other assets to his wife so that she gets the income?

Would it be that risky? In the event of a marriage breakdown for example, she is likely to get substantial assets anyway.

But clearly, if Revenue considered it an artificial transaction, it would be pointless from a tax point of view.

Brendan
 
Brendan Burgess said:
Hi Tommy

I thought it was part of wealth planning for (usually) a husband to transfer shares or other assets to his wife so that she gets the income?
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Hi Brendan

It depends. If it's to give her some income to spend or enjoy in her own right, I wouldn't see any problem. But if it's just to use up her tax band, I could see Revenue claiming that it's tax avoidance if it suited them to do so.
Brendan Burgess said:
Would it be that risky?
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I'm not sure how risky it is is practice. Probably not very risky in terms of probability but you don't really want to be leaving unnecessary hostages to fortune either.

Brendan Burgess said:
In the event of a marriage breakdown for example, she is likely to get substantial assets anyway.
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I agree but that would be a different scenario with no possibility of a tax advantage motive being claimed for the breakdown.
Brendan Burgess said:
But clearly, if Revenue considered it an artificial transaction, it would be pointless from a tax point of view.

Brendan
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Very much so.
 
There is no prospect of Revenue challenging an interspousal transfer such as this. None whatsoever. It’s almost certainly the correct advice.
 
T McGibney said:
Wouldn't both these actions fall within the definition of artificial transactions for the purposes of general anti avoidance legislation?

And wouldn't the first one turn out to be a disastrous move if anything unexpectedly happened @Premos ?
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No actually. I assume the poster is just doing this to take advantage of the additional 20% band. That happens all the time with Revenue's knowledge. The amount involved is too small for S.811 (the general anti-tax avoidance rule). This is seen as benign tax planning.
 
Greenbook said:
No actually. I assume the poster is just doing this to take advantage of the additional 20% band. That happens all the time with Revenue's knowledge. The amount involved is too small for S.811 (the general anti-tax avoidance rule). This is seen as benign tax planning.
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What is the lower limit specified in S.811 for it to apply?

Would you be prepared to give that advice in writing to a client in advance of a Revenue audit meeting?
 
Hi Tommy

I think it would be worth writing to a client

"Technically speaking Revenue could invoke anti-avoidance legislation so it is my professional obligation to warn you that a really strict Revenue official might challenge this and if they did, you would have no defence. However, this is a widespread practice, and I am not aware of Revenue ever having challenged it. However, the decision to do so is yours."
 
Brendan Burgess said:
Hi Tommy

I think it would be worth writing to a client

"Technically speaking Revenue could invoke anti-avoidance legislation so it is my professional obligation to warn you that a really strict Revenue official might challenge this and if they did, you would have no defence. However, this is a widespread practice, and I am not aware of Revenue ever having challenged it. However, the decision to do so is yours."
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It would never happen.

But even if it did, there’s a technical argument which Revenue would lose.

I haven’t the time or the interest to debate this because it’s so “out there”, but there’s no “misuse or abuse” of a provision and taxpayers are allowed arrange their affairs efficiently.
 
Gordon Gekko said:
It would never happen.

But even if it did, there’s a technical argument which Revenue would lose.
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Only a tiny percentage of such disputes ever get as far as the Tax Appeals Commission let alone a courtroom. In almost all cases, the client either doesn't have the stomach or the resources to fight that far. Revenues officials know this and are trained to scare people into coughing up when they've relied on a legal grey area like this.
 
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