Everything You Should Know About Divorce and Investment Property
When you’re getting a divorce and own rental properties, the process of dividing the asset becomes more complex. Divorce could be a complex process, and the more properties you own, the further complex it can become. So, what should you know?
The first step is to hire a lawyer, a property tax specialist, a financial advisor, a mortgage broker, and a surveyor to ensure that the legal and finances are all right. They can help you with going through all critical questions, decisions landlord advice that should be made, such as:
What is the total amount of mortgage debt and equity?
- Do you subdivide your property?
- What considerations do you consider when choosing who deserves what?
- What effect does divorce have on your buy to let loans?
- Do you plan on keeping them as rentals or sell them?
- Are you going to have to pay a bunch of taxes if you sell them or buy out your spouse?
Also Read: Mortgage Broker: Advantages and Disadvantages Of Working With A Mortgage Advisor
In the meanwhile, here are a few essential points to keep in mind:
- The properties are valuable assets that should be included in any legal financial settlement.
- In general, regardless as to whose name is now on the property deeds, all property inside a marriage are officially considered just to be jointly owned 50/50.
- If you have a joint mortgage, you’ll be wholly committed to your spouse/ex-spouse until the mortgage is paid off.
- To ensure that their actions will not harm your credit score, it may well be suitable to divide the assets as soon as possible.
- If you want to take out a joint mortgage on your own, be aware that your lender will most likely review your affordability. However, lenders rarely cancel mortgages unless there is a convincing reason. When you can show continuous rental income at a comparable level, they may agree to transfer the fixed facing.
- Transfers of investment property between spouses are protected from Capital Gains Tax. When you divorce, you may have a 12-month time limit before Capital Gains Tax kicks in.
How are investments and savings handled?
#1 – England, Wales or Northern Ireland:
Your investments and savings might be included in your entire financial situation. However, some assets may well be considered differently than others. For example, money or property inherited or owned by you and your ex-partner (spouse, wife, or civil partner) before your marriage or civil partnership.
#2 – Scotland:
In most cases, only investments or savings that you and your ex-partner amassed during your marriage or civil partnership are considered “marital property.” An increase in income from investments or savings held by you or your ex-partner before you married or entered a civil partnership may, nevertheless, be considered in some cases. It’s a difficult area to manage. If you’re unsure, it’s a good idea to seek professional help.
Also Read: Will I Ever Be Able To Afford a House As a First Time Buyer?
What happens to assets that are acquired before the divorce is finalized?
Anything you owned during your marriage would be categorized as marital assets, regardless of who owned it. When deciding what is an appropriate settlement in your divorce procedures, a court must consider everything you had during the marriage, as well as anything you held before the marriage. The time after you separate and before the final court order is included in the term during the marriage.
If you acquire a house before the divorce is finalized, the court must consider the house’s worth when making those decisions during the divorce proceedings. Although, your ex may be able to claim against the value of that house, or you may be able to acquire more of other assets you jointly share to make up for the fact that you now own that new house.
Conclusion:
You’ll need to figure out what you’d like to do with your investments after knowing the outcome of your financial settlement. For example, deciding to either sell, keep, or rent out a buy to let property or a vacation house.
If you need to remove your or your ex-name partner from the mortgage, contact your lender. If you believe you will have to remortgage, you should contact a mortgage broker. You can contact Mountview Financial Service, a well known financial advisor in London, for landlord advice, via our website for a free first consultation to discuss what might happen to your Buy to Let mortgages if you divorce.
