Question

love2learn

Hi,

Not sure if this is the right section of the forum, but as it's to do with debt I though I should ask it here.

My wife and I are considering selling our current house and moving to a cheaper area where we could be mortgage free.

We're considering buying the house in my name only, the reason for this is my wife is the only wage earner as I look after our child during the day. (House husband) We're looking at then buying a flat to rent out on a buy to let basis.

I want to know that if the house is bought in my name (main home), and my wife has a buy to let mortgage on the flat in her name only, if there was ever an issue with paying the mortgage on that buy to let flat... can creditors for the mortgage in my wife's name persue me for our main home that would only be in my name?

sourcrates

Hi,

In a nutshell, no.

Debt does not transfer to other people, debt in one persons name, stays with that person.

It may, if you have other joint financial products, effect your credit file to some extent, but creditors would not be able to pursue you, or anyone else, for any debt in her name.

dancing_star

Not debt related, but having the BTL property in the name of the higher earner may not be the most tax efficient way of doing it, as she would pay a higher rate of tax on the income than you (and you have your personal allowance).

Also, when you come to sell it, if the profit is over the annual CGT allowance, could be CGT payable.

Apologies if you already knew this.

love2learn

dancing_star wrote: »

Not debt related, but having the BTL property in the name of the higher earner may not be the most tax efficient way of doing it, as she would pay a higher rate of tax on the income than you (and you have your personal allowance).

Also, when you come to sell it, if the profit is over the annual CGT allowance, could be CGT payable.

Apologies if you already knew this.

Yeah we'd pay more tax on the profits, but it would need to be in my wife's name whilst the mortgage is on it as she's the one with the income. We'd put our main home in my name so it can't be touched by creditors if we ever had an issue paying the mortgage on the BTL flat, I doubt we would have, but best to prepare for anything.

After it's paid of she could transfer it to me to benefit from my tax free allowance and lower threshold (I have no income) and she's a 40% payer.

mumofthetwins

I thought you would need the gaurenteed (wage) income for your main mortgage, when we took out a buy to let mortgage (a few year ago mind) we were told that the rental income was the basis for the BTL mortgage.
Lisa x