The Crown Prosecution Service (CPS) used a confiscation order to seize John Dawes' assets after he was convicted of drug dealing and money laundering.
Helen Dawes maintained she was innocent of any wrong-doing and that her role was simply to run the household.
But the judge disagreed and said she was "shutting her eyes" to the obvious.
The CPS launched the High Court action to seize Dawes' assets after he was jailed in 2005 for 24 years.
But his wife fought the confiscation order claiming she was not party to her husband's activities and that she had a 50% stake in the home, valued at £177,486.
She claimed her role was simply to look after the house, their son and do the cooking while Dawes ran the finances.
But on Tuesday, Mr Justice Collins said: "Mrs Dawes turned a blind eye to what was going on, not because she necessarily did not want to know, but because she took the view that her part was merely to run the home, look after her child and provide for her husband."
He added: "It seems to me she has been shutting her eyes to what should have been obvious."
Dawes was estimated to have earned £8,283,161 between 1997 and 2003 from drug crime and he was ordered in September 2008 to pay back £355,000.
The court heard Mrs Dawes and her husband had several bank accounts with significant sums of cash passing through.
The amount of money involved was far in excess of what the couple legitimately earned.
Mrs Dawes has since moved in with her elderly father.
Mr Justice Collins said there was no reason why their son, who is in full time education, could not find somewhere else to live now he is over 18.
Dawes lost an appeal against his conviction in 2007 but maintains his innocence.

The 18-year-old man was taken to hospital with multiple stab wounds following the altercation in Bowleymead in the Eldene area on Saturday.
Daniel Peapell, 20, and Zac Doyle, 19, both from Swindon, were charged alongside 19-year-old Raffaele Bretti from Wroughton.
The three were remanded in custody by Swindon magistrates.
They will all next appear at Bristol Crown Court in July.

Karl Wainwright, 26, of The Black Watch and 22-year old Ben Peters of the Royal Dragoon Guards had been out celebrating the end of a training course.
The men had previously admitted throwing the sandbags into Merchant Street at 03:00 on 21 January 2016.
Sentence had been deferred for background reports.
Sheriff Kenneth Maciver, at the city's sheriff court, told the men: "Unfortunately, this is not an uncommon occurrence. In fact, too many people throw things over this bridge.
"A few years ago a young woman was seriously injured. It is a highly dangerous activity. It is absolutely obvious you could not predict where the sandbags would land."
Wainwright's solicitor, Mark Hutchison, told Sheriff Maciver there had been four men on a night out after completing a training course and too much drink had been taken. "It was an isolated incident of extreme stupidity," he said.
Charles Morrison, appearing for Peters, also described his client's actions as "extremely stupid and dangerous". Both men, it was said, were regretful for their actions.
CCTV footage showed Wainwright and Peters taking a cursory glance over the bridge, collecting the sandbags from the road and hurling them over without looking to see if there was anyone there.
Sentencing the men, Sheriff Maciver said: "It is extremely disappointing to see two members of our Armed Forces here in court, facing a custodial sentence, for what I describe as stupid and dangerous behaviour in the city centre of Edinburgh when you were both extremely drunk.
"It simply does not bear thinking about what that could do to someone if it had landed on their heads."
He added that, in different circumstances, he would have imposed a custodial sentence.
But, as neither man had any previous convictions and had good reports from their regiments, he would not and allow their regiments to deal with the matter.
The wife of a jailed Nottinghamshire drugs baron will lose the family home after a High Court judge ruled she turned a blind eye to his activities.
[NEXT_CONCEPT]
Three men have been charged with the attempted murder of a teenager who was stabbed repeatedly in Swindon.
[NEXT_CONCEPT]
Two serving soldiers who threw sandbags from George IV Bridge in Edinburgh onto a street below have each been fined £2,400.