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

This Tax Appeals Ruling may be relevant.

As I read it, one spouse transferred their share of the ownership of a property to the other, and as a result Revenue successfully got a clawback of the Section 23 relief granted to date.

This would tend to support @Gordon Gekko 's view that contractual transfers between spouses have meaningful effects when it comes to tax.
 
T McGibney said:
No answer to my first question.
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There is no lower limit in legislation. But of course there’s a lower limit in the real world.

This is a very strange discussion. The idea that Revenue would invoke Section 811 in circumstances where a spouse transfers a rental property to his/her spouse because the latter has no income is just bizarre.
 
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T McGibney said:
but that doesn't mean they get a free pass from anti-avoidance legislation.
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Reading between the lines of the judgement it appears that the spousal transfer was probably part of an attempt by the couple to balance their income most efficiently for income tax between them. But Revenue seemed to have said "well if you're going to do that we'll get you back on the Section 23 relief".

Couple were also attempting to claim mileage to and from property as a deductible expense which suggests that they were pushing the envelope very far already.

If I've mis-read this please correct me. It is of course just one case but does cast some light on the principles involved.
 
NoRegretsCoyote said:
Reading between the lines of the judgement it appears that the spousal transfer was probably part of an attempt by the couple to balance their income most efficiently for income tax between them. But Revenue seemed to have said "well if you're going to do that we'll get you back on the Section 23 relief".

Couple were also attempting to claim mileage to and from property as a deductible expense which suggests that they were pushing the envelope very far already.

If I've mis-read this please correct me. It is of course just one case but does cast some light on the principles involved.
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The circumstances of this case appear to be very different plus more nuanced and detailed.
 
T McGibney said:
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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It is not a legal grey area. It is normal tax planning/tax efficiency which Revenue have no issue with. The amount of tax involved is tiny and it is highly unlikely that the original poster is an audit candidate anyway.
 
Greenbook said:
It is not a legal grey area. It is normal tax planning/tax efficiency which Revenue have no issue with. The amount of tax involved is tiny and it is highly unlikely that the original poster is an audit candidate anyway.
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The legal grey area is the assumption that there is a de minimis limit for general anti-avoidance legislation.
 
T McGibney said:
The legal grey area is the assumption that there is a de minimis limit for general anti-avoidance legislation.
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I've thirty years plus experience working as a tax advisor. This is tax planning and is used routinely, without issue.

This doesn't even get near the GAAR and, in any event, deploying S.811 is a serious undertaking for Revenue with its recharacterisations etc. It is not used for mickey mouse stuff.
 
Greenbook said:
I've thirty years plus experience working as a tax advisor. This is tax planning and is used routinely, without issue.

This doesn't even get near the GAAR and, in any event, deploying S.811 is a serious undertaking for Revenue with its recharacterisations etc. It is not used for mickey mouse stuff.
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That's OK.

FWIW, I have roughly the same experience as you have albeit as an accountant. I have seen Revenue inspectors throwing everything but the kitchen sink at taxpayers in the course of audits and inspections including attacks on tax planning strategies that were not properly supported by reality and practical arrangements. That's why I may tend to err on the side of caution on questions like this, as I see at least some of my role as providing as much peace of mind to the customer as is possible in the circumstances.

But others are free to do their own thing and make their own judgment calls. As indeed in each individual case is the paying customer.
 
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Greenbook said:
I've thirty years plus experience working as a tax advisor. This is tax planning and is used routinely, without issue.
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Does a couple have to go to the bother of a change of ownership in order for one spouse to declare all rental profit as their income?

Or is it sufficient for one spouse to simply declare it as such every year?
 
Unlike @T McGibney and @Greenbook I have no professional experience in this area. However, as a mere taxpayer, I have always understood that anti-avoidance provisions are engaged when a transaction has no underlying purpose apart from tax avoidance. Secondly, it is a piece of heavy artillery that is aimed at large value (multi-million) transactions, often between artificial corporate or partnership structures that, objectively, make no sense, and are often aggressively marketed by (some) financial advisers.

In no way does a transaction between spouses come under this heading. It can be more than adequately justified as being "in consideration of natural love and affection" or an equitable sharing of family resources that recognizes the value of a spouses work in the home - bonus marks here for invoking a constitutional argument!

Secondly it's small beer. Sure, an aggressive tax inspector or official might threaten it's use - handy to scare people into supine submission - but I don't think they'd put it to judicial test (risking it's utility in much higher value cases) for a relative pittance.

And finally, if an interspousal transaction like this could be caught up in anti-avoidance provisions, then virtually any transaction could be. Very generous pension provisions for proprietary directors to name just one.
 
Thank you for all your contributions. Obviously I would have to look into it closer before making any changes.
 
NoRegretsCoyote said:
Does a couple have to go to the bother of a change of ownership in order for one spouse to declare all rental profit as their income?

Or is it sufficient for one spouse to simply declare it as such every year?
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I'd love to hear an opinion on this too!
 
Gordon Gekko said:
I don’t think that’s a runner at all.
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On the face of it it would appear far "too easy" and rent could be shuffled around at will to avoid tax. I always assumed that at the very least a limited life interest would need to be formally granted to the other spouse to make this legit.
 
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