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06 December 2006
We act for three clients who are family members owning over 20 buy to let properties in equal shares, but by verbal agreement two of the partners share all the rental income between them, whereas the third is just in it for the capital profit.
We have three queries, which are as follows.
We act for three clients who are family members owning over 20 buy to let properties in equal shares but by verbal agreement two of the partners share all the rental income between them whereas the third is just in it for the capital profit.
We have three queries which are as follows.
- Does this arrangement between them need to be formally evidenced by a written agreement and if so is it correct anyway as potentially the third party is saving higher rate tax?
- As this arrangement could be described as a 'partnership' would the respective capital accounts qualify for business property relief or does it have to be a full-time occupation?
- Could the properties be owned in unequal shares to compensate the third party from losing out on income — obviously subject to capital gains tax implications?
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