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Allocating property income and losses between a divorced husband and wife
Several properties are owned jointly by a couple who separated several years ago. There are two different groups of properties as follows.
Twelve properties are beneficially owned 50/50 by the (ex) couple. These properties have generally been loss-making but the husband has been funding all of these losses since the date of separation with no contribution from his ex-wife.
Second four properties are owned with another couple who are married. These properties have become profitable since 2011 as mortgage interest rates reduced but the husband has never received his share of the profits. This is because the other couple who control the bank account have always paid 50% of the profits directly to our client’s wife – now his ex-wife.
Because there was a major conflict of interest we now act for the husband only. Until now we have been taxing him...
