Tax and rental Income

M

mar0102

Guest
Hi,

Due to the fact that we cannot sell our house, we are thinking of renting it out (we have moved to the other side of the country and are renting there). As my wife is due to finish work in a few months, could we rent the house out in her name only, and use her tax credits and cut off point to cover the tax due on the rental income?
We are being jointly assessed for tax.
Thanks.
 
The rental income can be solely attributed to your wife if the house is in her name alone.

Assuming the house is in joint names the deeds can be transferred simply enough to her sole name. This maybe an issue if there is a mortgage on the property.

Once the property is in her sole name, the rental income will increase the standard rate cut off for a married couple (€45,400) by up to a max. of €27,400 for 2009.

Regardless of whether the property is rented or not you will be entitled to claim the full married tax credits. Your wife will not however be entitled to the PAYE tax credit from once she ceases work.

Hope this helps!
 
mar0102, your wife is entitled to the PAYE tax credit in full if she has earned €9150 in her employment (1830 x 5) in 2009.
 
Hi - Thanks for the input
So I guess as the house in both our names, we will have to pay the full tax on it if we do rent it out.
Is it a big job to switch the house to her name only - there is a mortgage on it.
 
Hi,

Not sure what you mean by full tax.

For example, if the house is in joint names and you earn €10,000 net rental (after expenses & restricted mortgage interest), there will be €5,000 attributed to both of you. Assuming your employment income is €45,400+, you will be able to increase the standard rate band by €5,000 (plus you wife's employment income until she stops working, to a maximum increase of €27,400).

In comparision if the house was in your wifes name solely, the increase would be €10,000.

It is not difficult to transfer the property to your wife's name and there will be no tax implications. The solicitors fees should be small enough. However, as I said before if there is a mortgage on the property, they may not allow the property in a sole name without some rejigging of the paperwork. Not my area of expertise though so someone else will have to help you out there.

I do know from personal experience that it is possible, I think (again not 100% sure) that you would have to sign something and get independent legal advice that you are aware and understand that you have a responsibility for the mortgage but no legal right to the property. This is what happened when I bought my house and my dad co-signed the mortgage but he is not on the title deeds.
 
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