Q&As

A deceased owns a rental property with their spouse as tenants in common, 50/50. The property receives rental income but they have created a declaration of trust confirming that the income will solely belong to the deceased. Does the income follow the capital so in fact the income should have been share between them or is the declaration sufficient?

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Published on LexisPSL on 16/12/2019

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • A deceased owns a rental property with their spouse as tenants in common, 50/50. The property receives rental income but they have created a declaration of trust confirming that the income will solely belong to the deceased. Does the income follow the capital so in fact the income should have been share between them or is the declaration sufficient?

HMRC will only accept that income is shared between joint owners of property in specified proportions if those proportions reflect the beneficial ownership. As well as providing evidence of the underlying beneficial ownership, the legal owners would also need to file Form 17 with HMRC. See HMRC manual: TSEM9851 Form 17 Rule—Evidence.

It sounds from this Q&A that the declaration of trust which was executed by the deceased (while living) and their spouse did not change the beneficial entitlement to the future sale proceeds of the property, but only contained an agreement that the income s

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