Q My partner and I are splitting up, sadly, but amicably, after 12 years together. We have two children, aged eight and six. The issue has become how we afford the new living arrangements without uprooting the kids from the area, and their friends and school. We want to share custody and stay where we currently live. At present, we rent a flat for her while I stay in the house we bought together. We are both happy with this arrangement as are the kids.
Our joint account pays for the rent and the mortgage until we can organise the long-term solution – worked out at the separation service Relate – which is for me to buy her out. But because the area where we live is becoming increasingly pricey, this could be a financial struggle.
The house we bought together is worth £825,000, with a joint mortgage of £450,000. The mortgage is interest only and for the next two years is fixed at £670 a month. The hefty equity in this property was largely a result of my remortgaging my old flat, which I bought for £190,000 in 2001 with a mortgage of £150,000. The flat is now worth at least £900,000 with an interest-only mortgage of £425,000, which comes to an end in 13 years’ time and which coincides with my retirement date. The monthly interest-only payments will soon be £1,271 from rent of £2,500.
The recent increase in rates means the property perhaps should be sold. This would raise the finance to buy my partner out and we can move on, sharing the kids. However, if I sell it without living back in it for two years to negate the tax, I face a capital gains tax (CGT) bill of £100,000 or more. This would reduce the funds necessary for me to live in the current house. We would then raise £400,000, with £200,000 to pay my partner, and
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