Should I Buy in Sole or Joint Name?
I am trying to work out what my options are if I/we buy a property to do up and sell on using the equity from our main residence. The question is whether to buy in just my name or in joint names with my husband and, in this particular case, would income be subject to CGT or income tax if we did manage to sell?
If we do not manage to sell, my contingency plan would be to rent the property out for a period of time. I am currently not working though if this project succeeds, I might consider future developments. My husband and I currently rent out a property which was our main residence many years ago, and is jointly owned and my husband is a 40% taxpayer.
Arthur Weller Replies:
If you buy a property, do it up and sell on, the profits would be subject to income tax, because this is a trading venture. If you rent out the property, you will be in receipt of rental income, which again is subject to income tax.
In light of the fact that you currently do not work, which I presume means that you have little or no income, but your husband is a 40% taxpayer, it would seem the best option for you to buy only in your name so that any profits will be subject to your marginal rate of income tax i.e. 20% and not your husband’s rate of 40%.
However, you need to consider the effect of buying in your own name, and not in joint names, on the possibility of getting a loan to do the project and the rate of interest you pay your lender, and, if you decide to take out a joint loan, whether you can offset all of the interest against your personal business venture.
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