Getting married. Financial advice needed!

Newlywed50

Hi,

New to here so hope I'm posting in the right place.

I am getting married in October, first time marriage age 50 :T
I own a flat worth £135, 000 (cost me £49, 000 18 years ago) approx £18, 000 left to pay on mortgage.
Monthly net income £1500. No debts or investments/savings. No children.

Fiance also owns a property where we will live when married. Worth about the same as mine, he has approx £35, 000 left on his mortgage. Has ability to make regular overpayments and does this as much as lender allows. He has a few savings and earns more than me a month, also pays child support approx £450 per month.

We both have work pensions.

We will keep our wages separate when married and contribute to a joint pot for shared living but still have our separate money for individual expenses.

Our first thought was to keep and rent my flat, but recently discovered that if we then decide to sell it in years to come, we'll get hammered for capital gains tax which will be a lot considering how cheaply I bought it for compared to what it's worth now. (Approx £20,000 CGT bill I calculated.. no way they're getting that!!))

So we now wonder should we sell and invest approx £80000 somewhere...but where?!

I believe we have 18 month post wedding to decide to avoid the CGT.

We have no desire to accumulate a fortune nor leave a fortune when our time on this earth comes to a close...no pockets in a shroud and all that :cool:

However we do want to live a rich (with experience) married life together and have the means to do this. Travel abroad, campervan adventures etc.

Concerns
If we rent flat then sell in years to come, large CGT bill.

If we rent flat, hassle of tenants coming and going and losing a cut that the agency will take to manage the property as we don't want the hassle.

If sell flat, what do we do with profits.

My financial security if I sell my home and God forbid marriage does not go as planned (at my grand old age, even when madly in love, you have to think of all eventualities!)

Any advice from a fretting borderline bridezilla gratefully received.

:happylove

TheShape

If you sell your property and then move in to his, you won't own a property and he will.

Better to change the ownership of his property to both own it as Joint Tenants. If you then divorce you have a jointly owned asset to split and if one of you dies, the other doesn't lose their home.

A rough calculation after you've sold your property, paid off your mortgage and bought half of his property is that you'd have approx £49500. His mortgage could be paid off with the proceeds of selling half to you and he'd have £32500.

Or you could say you've got a joint pot of £82000 for your adventures.

You'll probably want to look at your work pensions to determine whether you have sufficient pension provision for retirement. You may want to make additional pension contributions.

Mojisola

Newlywed50 wrote: »

I own a flat worth £135, 000 (cost me £49, 000 18 years ago) approx £18, 000 left to pay on mortgage.

Our first thought was to keep and rent my flat, but recently discovered that if we then decide to sell it in years to come, we'll get hammered for capital gains tax which will be a lot considering how cheaply I bought it for compared to what it's worth now. (Approx £20,000 CGT bill I calculated.. no way they're getting that!!))

Are you working that out using the price you bought the flat for?

AIUI, you will only pay tax on any increase in value from the time you rent it out to the time you sell it - your years of residence aren't counted.

Socajam

I agree with TheShape and you should seriously consider what is written, otherwise I could see you back here if things were to break down
Also remember your Fiance have a child which he is responsible for , that also needs to be taken into account.

You need to do what's best for you and use the what if scenario, otherwise I would hate to see you back here in a couple of years (older too) and being totally broke.
Not sure how old you are, but I would not never leave myself that I would be worse off if things do not work out.

xylophone

He has children so may well wish to leave legacies to them.


You could sell your property, pay off both mortgages and re- register his property on a tenants-in-common basis.

This would enable him and you to grant an interest in possession to each other in your wills so that you would both be secure in your home if (as is likely) one of you predeceases the other.

https://www.marlowwills.co.uk/life-interest-in-possession-trusts.aspx

Newlywed50

Thank you so much for your replies.
Definitely given us lots to mull over.

MOJISOLA thanks for pointing that out, I (perhaps wrongly) assumed that if I sold my flat I'd have to pay CGT on the total profit since I'd bought it 18 years ago. Is CGT really only calculated on any profit in value between the time I may choose to rent it out and sell it?
If that's the case, we may hang onto it as it's increase in value happened many years ago and during me living in it....it was sold to me too cheaply as well as just before property prices rocketed.

If we hang onto it, we'd both own an equal value property in our own names which sits easier with me....initially anyway. Plus it would be extra income to spend on the adventures!

I know I need to seek expert advice on thrashing this all out but really appreciative of those of you who have replied so generously with your advise and viewpoints.

Thank you!

Socajam

Newlywed50 wrote: »

Thank you so much for your replies.
Definitely given us lots to mull over.

MOJISOLA thanks for pointing that out, I (perhaps wrongly) assumed that if I sold my flat I'd have to pay CGT on the total profit since I'd bought it 18 years ago. Is CGT really only calculated on any profit in value between the time I may choose to rent it out and sell it?
If that's the case, we may hang onto it as it's increase in value happened many years ago and during me living in it....it was sold to me too cheaply as well as just before property prices rocketed.

If we hang onto it, we'd both own an equal value property in our own names which sits easier with me....initially anyway. Plus it would be extra income to spend on the adventures!

I know I need to seek expert advice on thrashing this all out but really appreciative of those of you who have replied so generously with your advise and viewpoints.

Thank you!

Wise choice keeping the flat.
One never knows what is around the corner and as someone who went through hell in my 30s, now later on in life, I would never sell my property if I were to get married.
That may sound selfish, but that's my insurance policy for whatever life throws at me.

Keep_pedalling

It is very important that both of you make new wills. Any you have in place now are likely to be invalid once you marry. You can make then in advance of marriage as long as they contain a in contemplation of marriage clause.

Thrugelmir

Any plans to buy a joint property?

Selling the property would enable you to improve your pension provision. Likely to be a better medium term investment than property. Taking in account tax relief on contributions.

Newlywed50

New wills, defiantly! Thank you keep peddling.

Tho I believe in Scotland (where we're from and live) marriage does not automatically invalidate the current wills we both have.
We'll check tho.
Thank you.

Yes socajam, think be best to keep flat if I can.

I'll be so relieved if capital gains tax isn't payable on the increase in the value of my flat since I bought it. Only on the increase in value during the time I'll be renting out.
Is this really the case?

It all seems very confusing and keep reading about this 18 mth period after marriage to sell the 2nd property to avoid tax bill. If its only increase in market value from now on, not bothered, but if its increase in market value since I bought it, very bothered!

Anyhoo...thank you all again.
This is proving a great place for info and advice!:)

Newlywed50

Joint property? No plans at present but we will consider it if his home doesn't suit both our needs for the long term.

When I get anxious trying to figure out all this stuff he says it's not like we're on the titanic charging towards the iceberg with no control...if we don't both like where we find ourselves headed, we just adjust and steer towards a different direction. No wonder I'm marrying him eh!!