Splitting house proceeds

SkinnyLove_2

Hi,

I have a problem and need some advice! 15 years ago my dad bought a flat in my name. My sisters lived in it, as did I...then I moved to London but as it was in my name I could never get another mortgage - even on 80K salary in London, i couldnt get a decent flat. Eventually, sick of renting at 1k per month, I came home, and asked the tenants to leave and completely renovated it - spent about 25k. Then I got married had babies etc, stayed there etc.

We now have to sell. Morally, im aware that I need to give my sisters something from the sale but am unsure how to calculate it.

So far, what I have done is - adding up mortgage liabilities, money I spent on getting it to an inhabitable state . However I dont feel like i should have to divide it equally by three as I was forced to rent for ten years while they lived there with subsidised rent (and trashed the place to boot). I also have an endowment on it which is underperforming and am unsure if I can legally/morally compensate myself for the loss as well?

How do I work this out fairly? They have since been given deposits for their own places, one from my mum, the other from her MIL. Neither is paying back that cash but I do need to pay back my dad as he needs it.

Secondly, is there a tax liability if I gift them money from the proceeds or would it be better to repay my dad and let him distribute it?

Thanks

loubel

If the house and mortgage are in your name, and your sisters didn't contribute to the house price, why should they get some of the proceeds of sale?

What was the agreement between you and your dad when he gave you the money to buy: was it a loan or a gift?

Danni-R

Hi,

Sorry I cant help 'properly' but I dont think you could use the fact you had to pay rent somewhere else as part of the reasoning behind reduced payment. You dont make it clear if its your sisters flat or if your dad intended it to be you and your sisters?

If its just an agreement between your dad and you I'd pay your dad back what you owe how ever you want to work it out.

My lovely dad gave me the deposit for my place. 1/3 of the value of the property and I've always said I'd give him back either a 1/3 of the value when it sells or the same amount he gave me, which ever was greater.

holly_hobby

SkinnyLove wrote: »

I have a problem and need some advice! 15 years ago my dad bought a flat in my name.

Then its your flat, and the proceeds are entirely legally yours.

SkinnyLove wrote: »

My sisters lived in it, as did I...then I moved to London but as it was in my name I could never get another mortgage - even on 80K salary in London, i couldnt get a decent flat. Eventually, sick of renting at 1k per month, I came home, and asked the tenants to leave and completely renovated it - spent about 25k. Then I got married had babies etc, stayed there etc.

So you and your siblings all vacated it, and you then rented it out.

SkinnyLove wrote: »

We now have to sell. Morally, im aware that I need to give my sisters something from the sale but am unsure how to calculate it.

You have decided to sell, not sure why morally you have to split with siblings, unless it was a clear understanding that Dad pchd the flat for all of you, but it was just registered in you name for one reason or another.

SkinnyLove wrote: »

So far, what I have done is - adding up mortgage liabilities, money I spent on getting it to an inhabitable state . However I dont feel like i should have to divide it equally by three as I was forced to rent for ten years while they lived there with subsidised rent (and trashed the place to boot). I also have an endowment on it which is underperforming and am unsure if I can legally/morally compensate myself for the loss as well? How do I work this out fairly?

Ah, Dad provided the deposit for the flat, and didn't actually buy it lock stock .... in that case, and as you have bourne the costs for maintenance, mge interest, up keep, etc, you could if you wanted, just divide the original deposit sum by 3, add interest, and that be it.

Of course there may be argument from some that you should provide them with their relevant split of the property market value gain, but as I say, given that you have bourne the on going mge/maintenance/refurb costs etc, I would feel this would be a tad unfair on you.

SkinnyLove wrote: »

Secondly, is there a tax liability if I gift them money from the proceeds or would it be better to repay my dad and let him distribute it?

Thanks

No tax liability to the donee on receipt of gift, however the donors estate may however be exposed to IHT tax, if they die within 7 yrs of making the gift, and their net estate is worth more than the nil rate IHT band (currently 325k per person).

Unless the deposit was formally recorded as a loan, then you gifting to sisters, via Dad, will not avoid IHT liability to your estate, if you die within 7 yrs (and as I say your net estate will exceed nil rate IHT band at the time).

If you did do this, and Dad dies within 7 yrs of transferring to siblings, then again there may be IHT issues depending upon the net value of his estate and nil rate band at time of death.

If you want to pay them, and IHT is a consideration, you need to look at who is most likely to be exposed during the proceei g 7 yrs, and whom is likely to pass first (as to avoid the gift being included in the estate as an unexpired PET).

Hope this helps

Holly

BitterAndTwisted

If they trashed the place and you've had to bear the cost of repairing and renovating it I wouldn't give them anything. They have their own homes now, and don't deserve a single penny