Buy out of sibling's share of property - is this fair?

_Penny_Dreadful

@redjuice55, it isn’t a theoretical loss to your sibling it is an actual loss. They continued to help service the mortgage debt whilst losing out on rental income, meanwhile you enjoyed a less expensive place to live. Of course you paid the utilities and council tax, you were the one living there using those services. 

WYSPECIAL

Given that you “owe” your sibling several years rent perhaps paying the CGT or splitting the total you are both liable for 50/50 would be fair?

When you bought the house together what was the agreement on when it would be sold and who could make the decision to sell?

Does your sibling even want to sell up?

Annisele

redjuice55 said:

When property was rented, the rent went directly into a joint account to pay mortgage, and build up some cash for additional costs and also make overpayments where possible. I have not been paying rent to my sibling, however we have both been paying the mortgage since I moved in. I guess this is a loss to my sibling in theory.

Not just a loss to your sibling in theory; an ongoing monthly loss because your sibling has been paying a chunk of your housing costs. I'd be pretty narked if I were in their shoes!

Your sibling apparently wants you to be responsible for the whole of the remaining £110k mortgage. My first thought was that that was obviously unfair. But if, say, your sibling has been contributing £500 a month to the mortgage for the last 20 years while you lived in the house alone, then I'd think your sibling was offering you an extraordinarily good deal.

FtbDreaming

I’m another one that thinks your sibling is in the right. They’ve effectively paid half your mortgage and free rent whilst you’ve lived there and now you don’t want to give them anything back. Your bills are your bills and you need to pay them no matter where you live.

They get a hefty bill now and lose an asset whilst you’ll still have the property which will inevitably increase further in value whilst you own it. I’d say suck it up and pay them what they’re asking otherwise you’ll probably end up with a lot of family conflict instead 

ThisIsWeird

"I guess this is a loss to my sibling in theory..." this seemingly-grudging acceptance of almost-certain reality is possibly the most telling of everything the OP has said.

"I have been paying the bills (gas, elec, water, council tax etc), home insurance, and general maintenance costs, just as you would have done in any other house you'd be renting. And just as your sibling is currently doing in their home and where I wanted to modernise parts of the house e.g. bathroom fittings, tiles, fitted wardrobes or buy my own white/electrical goods I have not asked for a contribution." Cool. At last a sum you can rightfully discount from your side. Can you put a value on this?

What agreement is in place for when to sell the house? Was this discussed and agreed from the off? Eg, can one person trigger this sale, or do both need to agree?

Perhaps a more accurate reworking of what each person has actually paid and contributed over the ownership of this house, and has saved, is worth doing? See how far the revised sums gets you.

Failing that, put the house on the open market, and see if your future wife can buy it...

eddddy

Out of interest, will it matter to your sibling what people on this forum think is fair?

For example, if you put lots of detailed numbers and calculations in a spreadsheet and show your sibling... Are they likely to say...

• "I've carefully studied your spreadsheet, and I can now see that you're right and I'm wrong, and I accept your figure."

Or are they more likely to say...

• "I don't care about your spreadsheet. I want half the value, and I'm not selling unless you agree."

SadieO

ThisIsWeird said:

I wanted to modernise parts of the house e.g. bathroom fittings, tiles, fitted wardrobes or buy my own white/electrical goods I have not asked for a contribution." Cool. At last a sum you can rightfully discount from your side. Can you put a value on this?

Not even sure I agree with this to be honest. OP says they wanted to do this. Not that it was essential maintainance that was to the benefit of the house. It was for their own comfort/ pleasure. If OP wanted some nice new wardrobes or to decorate the bathroom in a way that was more aesthetically pleasing to them, I hardly think their sibling or future buyer should be expect to chip in for this. 

"Modernising" can add value to a house if it's things like new wiring, adding central heating or double glazing etc. But updating the decor, or buying a fridge (for your own use while you are living there!) is not something you should expect to get reimbursed for. 

ThisIsWeird

SadieO said:

ThisIsWeird said:

I wanted to modernise parts of the house e.g. bathroom fittings, tiles, fitted wardrobes or buy my own white/electrical goods I have not asked for a contribution." Cool. At last a sum you can rightfully discount from your side. Can you put a value on this?

Not even sure I agree with this to be honest. OP says they wanted to do this. Not that it was essential maintainance that was to the benefit of the house. It was for their own comfort/ pleasure. If OP wanted some nice new wardrobes or to decorate the bathroom in a way that was more aesthetically pleasing to them, I hardly think their sibling or future buyer should be expect to chip in for this. 

"Modernising" can add value to a house if it's things like new wiring, adding central heating or double glazing etc. But updating the decor, or buying a fridge (for your own use while you are living there!) is not something you should expect to get reimbursed for. 

Fair point. Yes, only to the point that it either adds to, or maintains, the value of the property.

sheramber

redjuice55 said:

Thank you everyone for your comments thus far and for your patience.

When property was rented, the rent went directly into a joint account to pay mortgage, and build up some cash for additional costs and also make overpayments where possible. 

What about reporting the rental income to HMRC and paying tax  on it?

enthusiasticsaver

I think you should have been paying your siblings share of the mortgage given you were living there especially as they were not getting any rent for their half share from you.  The improvements you made may have increased the value of the property so that is a grey area.  On balance I think I would agree with the sibling.  They have not benefitted from the asset at all over the years you have lived there except for the change in value which presumably has increased.  They however have had the expense of half the mortgage.  You have had your sibling pay half your mortgage and no rent.  I think they should pay the CGT as this is a gain on the value of the asset which they will get when you remortgage but I think you should pay off the mortgage from your share of the equity given your sibling has paid half your mortgage all this time with no benefit. 

So Equity is £700k less £110k mortgage. so £590k.

Your siblings share is therefore £295k. They pay the CGT out of that. 
You will need a mortgage with your new husband unless you have savings of £405k to buy out your sibling and pay off the mortgage. No CGT for you as it is your main residence.