Paying off mortgage question

Charlie_Billie

My GF has eventually managed to sell her house and we had planned to use some of the resulting cash to pay off the remainder of the mortgage on my house.

I suspect I know the answer to this question but is it OK for her to effectively give that money to me to pay off my mortgage or would that open the gates to me having to pay tax on it and if so could I just keep quiet about it or would big brother be watching.

Ta

nellis10

Charlie_Billie wrote: »

My GF has eventually managed to sell her house and we had planned to use some of the resulting cash to pay off the remainder of the mortgage on my house.

I suspect I know the answer to this question but is it OK for her to effectively give that money to me to pay off my mortgage or would that open the gates to me having to pay tax on it and if so could I just keep quiet about it or would big brother be watching.

Ta

To my mind it would be your GF reinvesting in a new property in which case she is not liable for capital gains tax on a property. Will her name be going onto the deeds too? For her security?

Charlie_Billie

As the house she has just sold was the only house she had her name to she shouldn't have to pay any tax on her gains.

We weren't going to put her name on my house (purely because we were going to sell it soon) but this may be something we need to do to avoid any tax relating to her 'gifting' money to me.

The last thing I want is to get a tax bill at some point in the future relating to her money we used to pay off my mortgage.

Or maybe I am totally wrong and there is no issue.

Dithering_Dad

As you are going to sell your house soon anyway, and presumably buy one together, why pay to add your GF onto your mortgage. I'd be tempted to just bank her money until your house is sold and you are ready to pay for the new one.

While you may lose a bit of money in tax on the savings interest, having her money in her bank account would absolutely cement her tax situation regarding the capital gains, plus it will also be useful having a large amount of cash available if you see your dream house and have to move quickly to secure it.

nellis10

Dithering_Dad wrote: »

As you are going to sell your house soon anyway, and presumably buy one together, why pay to add your GF onto your mortgage. I'd be tempted to just bank her money until your house is sold and you are ready to pay for the new one.

While you may lose a bit of money in tax on the savings interest, having her money in her bank account would absolutely cement her tax situation regarding the capital gains, plus it will also be useful having a large amount of cash available if you see your dream house and have to move quickly to secure it.

I'd agree with this, no point adding money to your house if it's going to be sold to buy a new one anyway. I'd try and capitalise on all your tax free allocations, hig interest accounts etc in the meantime and once the house is sold, go ahead and trim down the mortgage then.