# Higher tax bracket - finance help needed



## slineclean (Dec 23, 2011)

Speaking on behalf of a friend of a friend 

They have their house paid for and looking into wanting to rent it out but with the income off the rent plus their normal works pay? They might go into the higher tax bracket. 

They've been advised to get a buy to let morgage but they don't want to be paying monies bsck on a morgage they don't need 

Could the persons house be put in 2 persons name ? Or where do they look to see what extra tax they would have to pay.


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## organgrinder (Jan 20, 2008)

The house can be put in two names but it needs to be done through a lawyer. HMRC will take a 50/50 split where a property is in joint names between husband and wife so if you want something different, the lawyers need to split the title differently.

Relief for mortgage interest on buy to lets is being restricted over the next 3 years and will eventually just be 20% tax relief. If you are a basic rate taxpayer it makes no difference but it can be significant for higher rate taxpayers.

Tax relief for mortgage interest is also going to be given by way of a tax credit, so the interest won't reduce the profit from rental. This can have unexpected consequences where say the individual's salary is £48,000 and he currently makes £1000 profit from letting his flat on which he pays £4,000 mortgage interest a year.

Once the changes kick in fully, the profit from his letting will be £5,000 and he will get a tax credit of £800 (£4,000 x 20%) for interest relief. The problem with that is that his gross income is now £53,000 (£48K + £5K) and if he or his wife currently get Child Benefit, they will start to lose some of it because their income exceeds £50K, even though nothing has changed!


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## RaceGlazer (Jan 10, 2007)

They really need to be advised professionally IMHO


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