What is it? A Declaration of Trust is a legally binding agreement between joint owners of a property. It details the terms on which a beneficial interest in a property is held and any income or gains are split according to Declaration of Trust rather than the legal ownership.
Who might need it? A Declaration of Trust is most often drawn up when you are purchasing a property with another person and you want to reduce the risk of disagreement and protecting everybodys investment.
If you purchase a property jointly with your spouse or civil partner then different rights and most importantly, different Tax rules apply.
Why might it save me Tax? If you are a married couple or in a civil partnership and you purchase an investment property jointly, the default tax position is that you will be taxed on the income 50:50. You may be able to allocate rental income and expenses in a more tax-efficient way. If one of you is in a higher rate tax bracket it may be beneficial to allocate the income to the lower earning spouse or civil partner.
for example, this could apply if one of you is higher rate and one basic rate or if one of you is earning above £100K.
How can we help? We can discuss your current position and advise you on the benefit. We can draw up your Declaration of Trust and submit the Form 17 election to HMRC according to your requirements. Declaration of Trust £250 + VAT
