Question for legal/accountancy types

Pete111

Morning all.

I am in the fortunate position of having just acquired a 1/4 ownership of some property/land assets along with 3 others in my family.

One of the 3 others wishes to 'cash out' on part of the assets (a property) that has been valued by and estate agent at approx £500,000. 2 of us are prepared to buy them out of their share (and are aware of the CGT implication etc here) but I have been told that in these circumstances a reduction in the value of the share to be bought/sold is often agreed to reflect the risk free nature of the arrangement for the other party - ie no sale costs, potential reduction in 'market' price etc if actually sold on the market etc.

Can anyone let me know if this is the case or if it would be unduly harsh to insist on buying them out but at a lower % than indicated the current 'market' value? Also and if a lower amount is the norm, is there a rule of thumb here in terms of %reduction?

Any advice much appreciated!

P

Strapped

The "fair" thing to do would be to pay them the market rate after selling costs (ie what they would have netted if the asset was sold on the open market, sale price less costs of selling).

Other things you may wish to consider: could they force a sale if you do not buy them out of their share? Can you force a sale if you need to sell your share at a future date? (And if not, then what is a share in the asset actually worth).

PaulLuke

And I'd get a proper paid for valuation from a surveyor as opposed to an estate agent's marketing valuation, which is likely to be higher than the 'true value' of the property on the open market.

saverbuyer

PaulLuke wrote: »

And I'd get a proper paid for valuation from a surveyor as opposed to an estate agent's marketing valuation, which is likely to be higher than the 'true value' of the property on the open market.

The "true value" of anything is what someone else is willing to pay.

But I agree I would pay little attention to EA asking prices.

There is a danger with this type of "family" transaction. With a normal transaction the buyer and sell will be looking to get the best price in their own interest. The danger is destroying relationships if you can't deal with this as a business transaction but with a equitable result.

Pete111

Thanks all.

The value has been agreed for CGT purposes but this was last year and the property is in a part of the country when house prices are falling (and property is simply not shifting)

Its a decent rental proposition but selling it may take some time and I would be surprised if the agreed value was acheived. Totally understand that there is more than just money at stake here though!!