Anyone know how property ownership affects benefits?

mortgageboyuk

Hi guys.

I'm new here and have a situation which will arise in the near future and just want to get some thoughts on it.

Currently I own a property with a mate, my share of the equity is about 35k. In the summer I'm planning on moving in with my girlfriend who has 2 kids but this will mean moving 30 miles from where i currently live so the property i own will be rented out.

The girlfriend has 2 kids both under 10 and so gets CTC. What i want to know is will the amount of equity i currently have in my house affect the CTC's that she gets when we move in together. If so and i were to sell the property rather than to rent it out then would any profit i make go against us? Also could i use some of the profits to clear other debts so reducing the amount of 'profit' i would make?

Hope someone can throw some light on this as it's proving to be a bit of a minefield!

Cheers.

BigAunty

Currently capital, in the form of equity for a property that you own but do not occupy, does not impact tax credits which are based on income. Will your employment income affect her tax credits when you move in anyway?

However, when tax credits are scrapped in the next few years in the move to the Universal Credit system, then this anomaly of asset rich people getting benefits, will be affected. Basically, UC will be calculated like other means tested benefits are now that take into account capital, like housing benefit, income support, council tax benefit.

This link has more info on how capital is calculated for properties. While your query isn't about HB, you can use it to understand how your means will be taken into account for other means tested benefits like council tax, income support and in future, UC. There is a section on HB elsewhere when you own a property that's not occupied.

http://www.dwp.gov.uk/publications/specialist-guides/technical-guidance/rr2-a-guide-to-housing-benefit/working-it-out/

The other question you have, paying off your debts with the capital when you've sold it, is a very complex topic which comes under the rules for 'deprivation of capital'. Google this. You would need to specify what those debts are, who they are owed to, if you are paying down debts ahead of the payment schedule or they are required to be paid back now, etc.

Rental income (after legitimate expenses are taken into account like repairs, agency fees, etc) is income, full stop. You don't get to ignore the income for the purposes of claiming benefits just because you have plans for it in terms of paying debts directly from it. Most benefits are based on income and your expenses are completely irrelevant to how they are calculated.

Suggest you post your debt problems on the Debt Free Wanabee board and see the Debt Management advice on the Direct Gov website.

mortgageboyuk

Cheers BigAunty

It's more whether the equity will affect anything that is my main concern. I'm self employed and have already calculated how net profit and any rental profit will affect things for us.

Cheers again for your advice :-)