Divorce can be a very messy thing and the more assets you have that need to be divided up, the more complicated it can be. For married landlords with investment properties, you may have a lot of questions and a great deal to consider in relation to your portfolio.
- How much total mortgage debt and equity is there?
- Do you divide the properties?
- How do you decide who gets what?
- What impacts does divorce have on your Buy to Let mortgages
- Do you keep them running as rentals or do you sell them?
- If you sell them or buy out your sppouse, are you liable for a lot of tax?
Clearly, it is worth engaging experienced professionals to make sure you get the legals and finances right: a solicitor, property tax specialist, financial advisor, mortgage advisor and surveyor.
Meanwhile, here are a few key points to know and consider:
- The properties are assets and are likely to form part of the legal financial settlement.
- As a general rule, regardless of whose name is on the property deeds, all marital assets are legally deemed to be jointly owned 50/50.
- If mortgages are currently in joint names and you wish to divide the properties so that you take on half each individually, be aware that your lender is likely to reassess your affordability. However, lenders don’t tend to withdraw mortgages unless they have good reason to, so if you can prove consistent rental income at a high enough level, they may simply agree to transfer the equity share.
- If you continue to hold a mortgage in joint names, you will be financially linked with your spouse/ex-spouse until the product is closed. So it may be wise to divide the assets, to protect yourself against your credit score being adversely affected by their actions.
- Any investment property transfers between spouses or civil partners are exempt from Capital Gains Tax and if you divorce, you get a 12-month grace period before Capital Gains Tax applies (at the time of publishing this article). This deadline applies to the date when the division of the portfolio is agreed, not the date when cash actually changes hands, so make sure you decide who gets what within that initial 12 months.
If you would like any more specific information on what will happen to your Buy to Let mortgages if you divorce, contact our partners, Embrace Financial Services, for a free initial consultation
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Embrace Financial Services usually charges a fee for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.