Amicable divorce, how to deal with the house 9 September 2021 at 10:26PM in Marriage, relationships & families 8 replies 591 views

MascaraMinx

After 15 years we’ve decided the time is right to get a divorce. We’re still very good friends and have 2 kids, so we’re trying to find a way to allow me to stay in the house with the kids without him suffering too much financial hardship. We both have an equal claim to the equity in the house, which is about £100k each, and no other real assets.

We don’t want to sell & split as this is the kids home and if possible we want them to be able to live here until they finish school.

I can’t afford to buy him out outright.
He wants to buy a flat for himself so will need some money for a deposit.

Between us, we came up with a plan that I would take on the mortgage and release £40-50k so he could buy a place, then the rest he’s owed could be held as a charge until the kids are older. What I hadn’t banked on was capital gains tax. Am I right in thinking he would be liable for CGT on the remaining amount?

Is there any other solution that might work for us? 

Thanks in advance….

Thrugelmir

No CGT on a family home. Can you afford the new mortgage in your own right, i.e. meet affordability criteria. 

MascaraMinx

Everything I’ve been reading suggests there is CGT on family home 9 months after one party moves out and it ceases to be their main residential home. It’s so confusing!

MovingForwards

See if your lender would be happy for your ex to have a 2nd charge on the property, it removes your ex from the title deeds as owner and has the money owed to him as debt against the property. Also avoids your ex incurring additional stamp duty.

Your solicitor can draft the papers / register it.

MascaraMinx

But it wouldn’t attract CGT when it’s eventually transferred to him?

MovingForwards

Why? It would be a debt owed to him not a portion of the property owned by him.

Brie

MovingForwards said:

Why? It would be a debt owed to him not a portion of the property owned by him.

It's an interesting suggestion.  Is there any downside to this?  i.e. if he gets into financial trouble could a sale be forced?

gizmo111

Brie said:

MovingForwards said:

Why? It would be a debt owed to him not a portion of the property owned by him.

It's an interesting suggestion.  Is there any downside to this?  i.e. if he gets into financial trouble could a sale be forced?

it's very common usually legally agreed by a Mesher Order/Agreement.

What Is A Mesher Order?  - Brookman Solicitors

MascaraMinx

MovingForwards said:

Why? It would be a debt owed to him not a portion of the property owned by him.

So the charge wouldn’t be treated as a an asset to transfer but a debt to be repaid? So he’d get back what he was owed rather than incurring profit if the  house increased in value - is that correct?