Financial & Legal Minefield - can anyone advise?

[NeverGuessWho]

Posting here for traffic. Will try to be brief. I am separating from DH & live in England.
There is a substantial amount of property within the marriage, that is tied up in DH’s company, but I am clueless how much equity there is, as DH refuses to provide current mortgage statements for any of the properties (even our home.) All the properties are in his name only, some purchased prior to marriage (while we were living together with our DCs,) some purchased during the marriage. He just always refused to put my name on anything.
My DF has offered to buy a property for me and DCs, who will live with me for 50% of the time. It will be in his name, until I get a financial settlement, which will take forever, as DH will drag his feet. Initially, the verbal agreement between DF and me was that I would pay the monthly loan/mortgage repayment, & this would be deducted from what I owe my DF. Solicitors fees, stamp duty etc, incurred will, of course, be added to what I owe my DF, to be paid off in the future, on receipt of a divorce settlement. Today, DF has told me he is going to increase the rent I will have to pay, none of which will go to pay off the sum I owe. He said that he will have to pay tax on the rent I pay him, and that buying the property is wiping him out.

Am I right in thinking that he will only have to pay tax because he now is going to make a profit, so it will be an income; whereas, if he had stuck to the original verbal agreement, and was charging me the same amount as the repayment, he wouldn’t be charged tax?

Also, does anyone know of the legal/tax implications of me getting a financial settlement, and then paying my father back what I owe him? Will I pay tax on the lump sum that I receive - I am clueless about this.

I am seriously considering just staying separated, and staving off a divorce indefinitely, so that DH doesn’t have to sell the house, IF we can agree that he gives me the money to pay my dad back. This amount would then be deducted from any future settlement if/when we divorce in the future. However, my head is telling me that this is insanely risky & foolish.

I know I need to see a solicitor, but they don’t come cheap. I’m on a very low wage and I thought if I could gain some wisdom here prior to making an appointment, it might save up some time and money.

TIA

I believe that it's only the interest on the mortgage that isn't taxable, but capital repayments are classed as profit.

Just ask your dad for the money for an initial consultation with a solicitor so you can figure out how to best navigate this, it’s fact dependent

You cannot deduct mortgage capital from profit and mortgage interest is going to be phased out next year, so neither are deductible when working out profit on rental

Any advice you get here will not be legal advice. It will be what randoms on the internet think the law is, rather than what it actually is.

This sounds very complicated. You need proper legal advice, I understand it is not cheap but the cost will be nothing compared the mess you could end up with if you follow advice from randoms on a website.

My advice is, going and see a specialist family law solicitor.

If your dad's treating this as a business decision then so should you :

• do you get a budget to choose any house you like, or is your dad involved in deciding which house to buy?
• how does the rent that your dad proposes compare to rent on the open market?

I am not a lawyer so can't help much, but my initial reaction would be to say "thanks but no thanks" to your dad and ask him to help you get the best divorce lawyer possible. Can you stay wherever you're living now for the forseeable future? If you're in the UK there's sometimes the option of staying in the family home until your children leave education - I don't know the exact circumstances, but from what others have posted this would be part of a divorce settlement.

Anyway, I would suggest asking around for recommended divorce lawyers and speak to a few, try to find one you are comfortable with. Good luck.

Get a solicitor not a non-qualified "opinion" from the internet.

Get a lawyer. Please. This sounds complicated - not just the buying through your DF bit but also the financials with your ‘D’H who seems to have things to (financially) hide.

Your Dad needed to have taken detailed advice before making offers to you. If he buys he has to pay the second home Stamp Duty, there may be a capital gains implication, his own tax status etc etc.

And all this to avoid the real issue which is needing to get a divorce and settlement with your Ex.

Get legal advice in that now. You are still married. You can pay your lawyer out of the proceeds of the split. He is obliged to be sharing his income etc and supporting his kids NOW.

You need advice from a lawyer on all this ASAP before any more time or money gets spent in ‘good idea’ schemes.

Get what you are entitled to from your Ex! Good luck, it will be worth it in the end.

Echo the above - the combination of your lack of knowledge about your marital finances, a hostile XDHTB withholding financial information about marital property and your situation with your dad are really really complex and are going to need quite a bit of legal input.

I think this is simpler than you are making it.

Just rent on the open market until your divorce comes through. If your dad wants to loan you some money it would be better put towards getting a forensic accountant and solicitor.

I wouldn't continue messing around with your dad buying you a house if now he's actually thought it through he can't afford to make this gesture.

I understand you want stability for you and your children but the divorce could take years and it doesn't sound like you and your dad have the kind of relationship where he won't be on your back about money all the time which is additional stress you don't need.

A good lawyer is essential for a complex case like this. They will get more for you in the end. Dont mess around on an internet forum.

You've been massively naive so far not having any idea of the financials of your marriage. get proper legal advice now to unwind it. It isn't going to be cheap. And never stick your head in the sand like that again. good luck.

Yes your dad will have to pay a higher rate of stamp duty (assuming he already owns a property himself.) When he sells to you if the value if the property has risen by more than the capital gains tax annual allowance he will have to pay capital gains tax.

Your dad will have to pay tax on any rent paid after expenses (and if he is a higher rate tax payer he will have to pay some tax on the mortgage interest too.). For example if you pay £600 rent for a month and £200 is mortgage interest, £100 of other expenses and the other £300 “profit” (even if it is paid towards the sum owing on the mortgage it is profit”). He would need to pay his tax rate on the £300 (40%?) and pay tax on the mortgage interest paid but with a 20% credit (so in effect 20% tax?). So you can see how he can make no profit as you would usually think of it e.g. the rent the same as the mortgage payment and still have sizeable tax to pay.

Your dad could lend you the money and put a legal charge for the same amount against the property to protect his money and protect you both in the divorce proceedings but if he requires a mortgage then that won’t be possible.

Could you stay put in the family home and try to keep it (ideally paid off) balanced against your ex keeping his business property/pensions/savings if the amounts would be sufficient.

If you and your husband can come to an agreement you can decide what happens in your financial settlement. You could use mediation. If you can’t agree the court would have to decide but that will be expensive and the cost will come from the pot so there would be less to share.

Also, your Dad has (perhaps wisely) changed his offer to you and you sound resentful of this.

I suggest putting all your effort into fixing the mess with your stbx. Not moaning about your Dad or trying to find ways of getting him to give you the money. Why should he? Have you even seen a solicitor? Are you any closer to sorting this out?

In the nicest way, pull your head out of the sand and start to deal with this. A lawyer will help you.

Just to clarify I gave an example of tax at a monthly level but it is obviously annual figures that matter

The refusal to share any financial information and to allow you the benefit of any assets etc is potentially financial abuse which may now be caught under the criminal offence of coercive and controlling behaviour.

It is vital you get really good advice. Spend some money on a good lawyer. Also gather every scrap of information you can about the business, bank accounts etc. No matter how small, photograph it with your phone when you can and make notes. Don’t mention anything to your DH about checking for assets but have in the back of your mind you might need a forensic accountant if there is a lot of money.

Note - Land Registry searches online are cheap and Companies have to file returns with Companies House.

Your father is the kind of man to piss you about with property, and you ended up married to a man who pissed you about with property. Coincidence?

Your dad obviously has money. The single best thing he can do to support you right now, is pay for you to see a solicitor to get your divorce and financial settlement moving.

If he won’t do that, he doesn’t have your best interest at heart - and I wouldn’t touch his property with a flipping barge pole!

If you’re definitely going to divorce, don’t hang around: your DH sounds like the type to hide things, and any delay while you sort out housing in the meantime etc. will just give him more time to squirrel things away

You are wrong, that he wouldn’t pay income tax if you were paying him the exact mortgage amount.

A PP mentioned mortgage interest relief. But even that has massively changed in the last 3 years, with more changes to come this April:

www.which.co.uk/money/tax/income-tax/tax-on-property-and-rental-income/buy-to-let-mortgage-tax-relief-changes-explained-atnsv0j6j782

Basically, a lot of the mortgage interest relief is disappearing and it’s now much less profitable to do a BTL - especially if you are a higher rate tax payer, which I assume he is.

It is possibly that he just didn’t realise all of this... but if so, even more reason not to get into something with a man who doesn’t know their arse from their property elbow, with a solicitor.

You need a property solicitor and a divorce solicitor, and a good dad will lend you the money for those.

You need a shl and a forensic accountant to get to the bottom of your stbxh financial shenanigans.

And why would your husband, who is obviously a clued up and difficult man, ever agree to giving you money outwith a divorce settlement?

The only thing that absolutely finalises finances is a Consent Order, which can only be applied for when you have a decree nisi. So, he could give you £50K, you could sign whatever the hell you like together, you could still go for half the house 5 years later when you actually divorce. Sure, the private agreement might carry some weight for a judge - but they might see that as desperation on your part to get housed, and not in your best interests overall. Your husband will know this, I’m sure.

You cannot afford not to see a solicitor. It doesn’t sound like you’ve done much reading yourself though? There are lots of online resources - wikivorce is a good place to start.

With regards to paying income tax on your settlement... in general, no! Because all you are doing is dividing up assets that you already own, as a joint owner. Your XH isn’t “giving” you anything. You are just taking what you already own.

Your father is the kind of man to piss you about with property

Isn't it funny how people can interpret the same information in different ways.

How is he 'pissing' her about?

Its sounds like he's made an offer to help his adult daughter stay on the property ladder and then has looked into the financials properly and realised that it's not that simple and he will be liable for extra costs. He's still making the offer to his daughter but has warned her she will also have to cover the extra costs so he isn't out of pocket.

His adult daughter seems annoyed that she is being asked not to leave him out of pocket, yet he's the one who's being made out to be tight-fisted?

I agree though there does seem to be an element of the OP not historically taking financial responsibility for herself and she needs to address that.

Call me a cynic but does your XH want 50/50 time with the kids so he can avoid maintenance . Maybe I'm wrong and he is already a hands on parent though.

You need to see a solicitor right away. You almost certainly will get the house you currently live in and would be ill advised to leave it as your right may be even worse.

Today go on line and register at the Land Registry your spousal right to the matrimonial home so your husband cannot sell it over your head and disappear abroad with the money. I think you can find the form here - www.gov.uk/government/publications/notice-of-home-rights-registration-hr1.

Then see a solicitor. There is no need for your father do to anything.

Then go on the Companies House website and download everything financial about your husband's company - partifcularly look for who is the person of significant control and look at any older annual returns which may show who the shareholders are eg 100% your husband or someone else.

Your father could pay you say £200 so you can see a solicitor for one hour. That would be better than the other plans.

If your husband doe snot tell you about the loans and porperties you may have to start divorce proceedings during which he is forced to disclose all that. You could even tell him you are seeing a solicitor and if he does not give you the latest financial i nformation you will have to go to court to obtain it and will then expect him to pay the legal costs of that when he could instead hand it over now for nothing. Also is the information not just at home? In our divorce we did each other's filing and had no secrets so knew everything - does your husband instead lock things up and hide them?

Do you get child benefit and/or does he then pay it back - that might be one indicator as to his income and what is on his tax return.