Remorgaged home and new buy to let property put in wife's name

Housing_Benefit_Officer

A relative has recently mortgaged his home which he owned outright with no mortgage and given the money to his 2nd wife who has purchased a house to rent out to her daughter.

He told his bank he was buying an investment property but his wife talked him into her buying a property for her adult daughter and her family by saying she would pay no stamp duty and wouldn't have to pay tax on the income as she is unemployed.

My relative came to me to borrow money as his home needs repairs and he revealed what he had done.

Would the bank take any action if they discovered the buy to let property is in his wife's name and not his?

What would the tax consequences be if the property purchased in his wife's name was transferred back into his name?

HappyMJ

A property was purchased with the money advanced. It doesn't matter that it's in his wife's name. They are part of a couple. The mortgaged property is the one they live in and repossess so it doesn't matter what he did with the cash.

No tax consequences for transfers between husband/wife/civil partners. Although he'd have to start paying tax on the rental income where the wife as she earns no money doesn't pay any tax.

eddddy

So I think you saying...

Your relative mortgaged his house, telling his bank that he planned to buy an investment property.

He later changed his mind and decided to gift the money (or maybe lend it) to his 2nd wife instead (and she bought a property for her daughter to live in).


... I doubt it was a condition of the mortgage that the money be used to buy an investment property. So I doubt that your relative has broken any conditions of the loan. So the bank will not be interested.

But if he's short of money as a result, and perhaps becomes unable to pay his mortgage - obviously the bank might repossess his house.

Housing_Benefit_Officer

His second wife is on her third marriage and have a bad feeling where this is going to go. He will be left with a house with a mortgage and his wife has a property in her own name.

As long as he can get the property put into his or joint names then he should be a bit more secure than being left with all the debt if she goes off with someone else.

booksurr

Housing_Benefit_Officer wrote: »

His second wife is on her third marriage and have a bad feeling where this is going to go. He will be left with a house with a mortgage and his wife has a property in her own name.

As long as he can get the property put into his or joint names then he should be a bit more secure than being left with all the debt if she goes off with someone else.

with respect trying to second (fourth!) guess your "friend's" marriage prospects is a completely different scenario to the OP re the tax consequences of her owning it

yes transfers between husband and wife are tax free, and if she is a non taxpayer then (provided rental profit is less than her personal allowance) she will pay no income tax but if there is a divorce who gets what is a fresh exercise and nothing to do with who "owns" what

in very general terms (and with no kids from the marriage) for
- a short marriage: each will be put back to where they started. If he can prove all the money for the house came from him he should get that back (how any profit is split is a different matter)
- a long marriage: 50/50 will be the start point, the rest is down to how good her lawyers are at ripping him off (how big is his pension pot?)

Housing_Benefit_Officer

booksurr wrote: »

with respect trying to second (fourth!) guess your "friend's" marriage prospects is a completely different scenario to the OP re the tax consequences of her owning it

yes transfers between husband and wife are tax free, and if she is a non taxpayer then (provided rental profit is less than her personal allowance) she will pay no income tax but if there is a divorce who gets what is a fresh exercise and nothing to do with who "owns" what

in very general terms (and with no kids from the marriage) for
- a short marriage: each will be put back to where they started. If he can prove all the money for the house came from him he should get that back (how any profit is split is a different matter)
- a long marriage: 50/50 will be the start point, the rest is down to how good her lawyers are at ripping him off (how big is his pension pot?)

She has had 2 messy divorces but was previously living on her own on benefits in a housing association property. My fiend has contributed into a Local Government Pension scheme for nearly 40 years. Just concerned his main asset is mortgaged and the new property is in his new wife's name.

alibean121

Sometimes you just have to stand back and hope you're wrong!

Don't ruin your friendship by making unfounded accusations against your friend's wife.

[Deleted User]

Yes as its a done thing now, you can't give any useful advice. Its too late. Hopefully it won't go wrong.