Rental Property bought in partnership, how to deal with this?
Guest007
Registered Posts: 54 Epic contributor 🐘
Client bought a property in partnership with his father. They deposited 50% each of the total deposit but the property is in his name. As I can see, this seems like his property. So, in tax return, we must declare the whole rental income against my client. But he is refusing to do so due to the income have been given 50% to his father.
Am I right in this situation? If you have any opinion on this, please share.
Regards,
Am I right in this situation? If you have any opinion on this, please share.
Regards,
0
Comments
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If there's evidence it is being run as a partnership with all costs and income split 50:50, then this should be ok to treat the tax on the same basis. I think, I'm sure a better tax person will confirm.
Purchase and sale of the property would be covered under capital gains. How would any gain / loss be treated?0 -
Yes, I would treat this as a partnership.0
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I've come accross this a few years ago and the advice in Tolleys (which I've just checked again to make sure!) says that where the owners aren't spouses that 'usually shares of rental income are equal to their respective shares of ownership in the property, however the joint owners may agree to share income differently'.
I don't know if it makes a difference that there's only one person's name on the deeds.
More info at HMRC's Property Income Manual at PIM1030.0 -
If there is a mortgage, is this in joint names? HMRC will deem it as a partnership if the mortgage is in joint names I know.0
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Not a join mortgage in this case
I am sure about the joint mortgage case.
But this property is in cleints name alone but his father is a partner without any documents...0 -
Tax man will always want to know about the mortgage. You will need that information for the accounts anyway.0
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