Thank you.Your husband could transfer the property to you tax free (you would incur solicitor's fees though and you would need to check what your will situation is). Alternatively, he could just waive his right to the rent for a number of years meaning it is all yours (again, a solicitor should draw up this document). Again, no tax on his 'gift' of the income to you.
Wouldn't both these actions fall within the definition of artificial transactions for the purposes of general anti avoidance legislation?Your husband could transfer the property to you tax free (you would incur solicitor's fees though and you would need to check what your will situation is). Alternatively, he could just waive his right to the rent for a number of years meaning it is all yours (again, a solicitor should draw up this document). Again, no tax on his 'gift' of the income to you.
These were some of my concerns.Wouldn't both these actions fall within the definition of artificial transactions for the purposes of general anti avoidance legislation?
And wouldn't the first one turn out to be a disastrous move if anything unexpectedly happened @Premos ?
I’ve never read the legislation or guidance but always assumed that if a property is owned 50/50 then the rental profits should be 50/50 for tax purposes.Wouldn't both these actions fall within the definition of artificial transactions for the purposes of general anti avoidance legislation?
Yes, but all depends on the circumstances and it's impossible to advise properly without knowing all the background details. That said, the advice that one spouse should transfer their share to the other was crazy.I’ve never read the legislation or guidance but always assumed that if a property is owned 50/50 then the rental profits should be 50/50 for tax purposes.
Perhaps a different split if one partner is entirely passive and the other does the active management.
But for a married couple with a jointly-owned property I can’t imagine how you would plausibly assign all income to one spouse.
Hi BrendanHi Tommy
I thought it was part of wealth planning for (usually) a husband to transfer shares or other assets to his wife so that she gets the income?
I'm not sure how risky it is is practice. Probably not very risky in terms of probability but you don't really want to be leaving unnecessary hostages to fortune either.Would it be that risky?
I agree but that would be a different scenario with no possibility of a tax advantage motive being claimed for the breakdown.In the event of a marriage breakdown for example, she is likely to get substantial assets anyway.
Very much so.But clearly, if Revenue considered it an artificial transaction, it would be pointless from a tax point of view.
Brendan
Does this only apply from men to women?part of wealth planning for (usually) a husband to transfer shares or other assets to his wife so that she gets the income
If there are substantial assets to be had are they not divided equitably?In the event of a marriage breakdown for example, she is likely to get substantial assets anyway
No actually. I assume the poster is just doing this to take advantage of the additional 20% band. That happens all the time with Revenue's knowledge. The amount involved is too small for S.811 (the general anti-tax avoidance rule). This is seen as benign tax planning.Wouldn't both these actions fall within the definition of artificial transactions for the purposes of general anti avoidance legislation?
And wouldn't the first one turn out to be a disastrous move if anything unexpectedly happened @Premos ?
What is the lower limit specified in S.811 for it to apply?No actually. I assume the poster is just doing this to take advantage of the additional 20% band. That happens all the time with Revenue's knowledge. The amount involved is too small for S.811 (the general anti-tax avoidance rule). This is seen as benign tax planning.
Yes.What is the lower limit specified in S.811 for it to apply?
Would you be prepared to give that advice in writing to a client in advance of a Revenue audit meeting?
It would never happen.Hi Tommy
I think it would be worth writing to a client
"Technically speaking Revenue could invoke anti-avoidance legislation so it is my professional obligation to warn you that a really strict Revenue official might challenge this and if they did, you would have no defence. However, this is a widespread practice, and I am not aware of Revenue ever having challenged it. However, the decision to do so is yours."
No answer to my first question.Yes.
Only a tiny percentage of such disputes ever get as far as the Tax Appeals Commission let alone a courtroom. In almost all cases, the client either doesn't have the stomach or the resources to fight that far. Revenues officials know this and are trained to scare people into coughing up when they've relied on a legal grey area like this.It would never happen.
But even if it did, there’s a technical argument which Revenue would lose.
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