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  • FIRST POST
    • Cjb777
    • By Cjb777 9th Aug 18, 3:47 PM
    • 13Posts
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    Cjb777
    Being bought out
    • #1
    • 9th Aug 18, 3:47 PM
    Being bought out 9th Aug 18 at 3:47 PM
    Hi,

    I hope you can help me or if not maybe point me in the right direction

    My wife and I are separated, we both co own a flat which has estimated value of between 260,000 to 270,000 she has had it valued. I paid the mortgage off years ago, so there is no outstanding mortgage. She is still living in the flat but has met someone else. Now she wants to move and has seen a property they want to buy.

    We looked at the possibility of renting but that became too complicated, so, sadly from my point of view the only option left was to sell it ( and advice received on a previous thread from here was instrumental in that decision for which I was so grateful ). I am back home living with my Mum in a different county and I have never sold a property before.

    But that now has become irrelevant, my head is spinning ....... they now tell me ( my wife and partner ) that as it stands selling the flat raises insufficient funds for them to buy the house. Now they want to buy me out and do a Let to buy and rent the flat out !

    Again, I am in unchartered waters and to be honest becoming a little overwhelmed by the situation, the split was bad enough ... so any tips on the best procedure for this or advice, links, charges, any taxes I may incur, solicitors, agreeing a price etc: would be so very welcome and genuinely very much appreciated.

    Many thanks and kind regards
Page 1
    • PasturesNew
    • By PasturesNew 9th Aug 18, 3:50 PM
    • 65,287 Posts
    • 383,139 Thanks
    PasturesNew
    • #2
    • 9th Aug 18, 3:50 PM
    • #2
    • 9th Aug 18, 3:50 PM
    The only difference from your point of view is who buys it.... you expected a stranger to buy it, instead it'll be your ex who buys it.

    So long as you end up with the same amount of money in your pocket that you'd have got if a total stranger bought it, then it doesn't matter what twists/turns they go through, or how they choose to buy/name their borrowing route.

    Forget all the fancy names .... just concentrate on what'll be in your pocket at the end. You don't need to know what complicated methods they'd be going through to own it.
    • TBagpuss
    • By TBagpuss 9th Aug 18, 3:59 PM
    • 6,967 Posts
    • 9,186 Thanks
    TBagpuss
    • #3
    • 9th Aug 18, 3:59 PM
    • #3
    • 9th Aug 18, 3:59 PM
    What Pastures New says is correct. You transfer (sell) the flat to your wife (or to her and her current partner, if that is what they want), she pays you a lump sum equal to 50% of the value (or whatever other settlement you've agreed),

    What she then does with the flat is up to her.

    The usual way to do it would be that she would pay the costs of transferring the flat into her name, but that in working out the net equity to split you would take into account 'notional costs of sale' (typically 2% of value) on the basis that that means you end up with the same as you would have if the house were being sold on the open market.

    It would however be sensible to ensure that you have either an order (if you are divorcing) or a deed of separation if not, in place so that there is a clear financial settlement and neither you nor she can come back with further financial claims against the other in future.
    • TBagpuss
    • By TBagpuss 9th Aug 18, 4:00 PM
    • 6,967 Posts
    • 9,186 Thanks
    TBagpuss
    • #4
    • 9th Aug 18, 4:00 PM
    • #4
    • 9th Aug 18, 4:00 PM
    You shouldn't incur any taxes, unless you own another property in which case CGT may be relevant.
    • tlc678910
    • By tlc678910 9th Aug 18, 4:44 PM
    • 749 Posts
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    tlc678910
    • #5
    • 9th Aug 18, 4:44 PM
    • #5
    • 9th Aug 18, 4:44 PM
    Hi,
    You have mentioned your wife got the flat valued. If you are not confident of the valuation then you should instruct your own independent valuation. Does the price sound right compared to recent local sale prices you can find online.

    If you and your wife agree a price that she can buy you out for then you both instruct your own solicitors like you do in a normal house sale/purchase. As your wife will need a mortgage there may be surveys and searches performed to satisfy the mortgage lender.

    As others have said I wouldn't waste your energy worrying about what they are going to do with the flat once they have bought it. As long as you get a fair price then let them get on with it.

    Just in case.... As this unfolds you might be asked to stay a part owner/loan money /wait to be paid back in future. Any complications will become very difficult to resolve in the future and upsetting for you so stick to your guns and say no, get everything wrapped up now and don't be taken for a ride. Whether they can afford their house is not your problem so don't let them make it your problem.

    Tlc
    • Cjb777
    • By Cjb777 10th Aug 18, 11:51 AM
    • 13 Posts
    • 3 Thanks
    Cjb777
    • #6
    • 10th Aug 18, 11:51 AM
    • #6
    • 10th Aug 18, 11:51 AM
    Hi,

    Firstly, thank you all so much for taking the time to offer advice, its still being digested and is much appreciated and apologies if you have already given me answers, its taking a while for it to sink in as this is a very emotive issue for me still.

    So, If anyone is still up for it and has the patience I have some more thoughts that I need to get off my chest while they are still in my mind, its still spinning and again at the risk of sounding cheesy I would be so grateful for any comments.

    We have been separated for nearly 5 years and as they say hindsight is a wonderful thing and looking back at the house prices of 2016 it would have been considerably better financially to have done it then, but for me the split took its toll and I was in no mood to deal with it then, if I'm honest I'm not having much fun now ha-ha !

    My reason for not wanting to part with the flat was that I saw it as an investment and something that would only increase in value and interest rates on cash haven't been much good for years. And if I am honest it was my home for most of my adult life and I just found it a little difficult to let go, stupid as that may seem.

    But I realise that now if she wants to move on that I have no right to stand in her way. The issue is now property prices in that area have dropped. Yet because they have chosen to buy somewhere else it presumably factors in the dip in price, well I know it does as the price of the property they are buying has come down. I am not in a position to buy anywhere else, so after all this time it feels like I will have to pay for the dip in house prices and the hopeless interest rates, unless of course house prices come down even more !!!8211; which I doubt, I think this is a blip, estate agents seem to be blaming it on the Brexit saga ( I have no idea ) so when they finally get this thing sorted out, I suspect house prices will rise through the law of supply and demand, which then will be no good to me as the horse has bolted .... all guessing I know but nevertheless!

    Apologies for going on and on but this is so important to me. The point is, and one of my conundrums, if the property was solely mine I would not be selling as the price has dropped too much ....... so should I be factoring this in when we come to agree the buy out price. We are at the stage where we are just waiting on our third valuation.

    Again I am sorry if this sounds stupid but I have never been involved in anything like this in my life but I am also wondering do we both need solicitors or is the onus on one or the other to take the lead.

    Anyone who has taken the time and had the patience to read this and can offer any more advice ... bless you !
    • Comms69
    • By Comms69 10th Aug 18, 12:05 PM
    • 5,899 Posts
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    Comms69
    • #7
    • 10th Aug 18, 12:05 PM
    • #7
    • 10th Aug 18, 12:05 PM
    Hi,

    Firstly, thank you all so much for taking the time to offer advice, its still being digested and is much appreciated and apologies if you have already given me answers, its taking a while for it to sink in as this is a very emotive issue for me still.

    So, If anyone is still up for it and has the patience I have some more thoughts that I need to get off my chest while they are still in my mind, its still spinning and again at the risk of sounding cheesy I would be so grateful for any comments.

    We have been separated for nearly 5 years and as they say hindsight is a wonderful thing and looking back at the house prices of 2016 it would have been considerably better financially to have done it then, but for me the split took its toll and I was in no mood to deal with it then, if I'm honest I'm not having much fun now ha-ha !

    My reason for not wanting to part with the flat was that I saw it as an investment and something that would only increase in value and interest rates on cash haven't been much good for years. And if I am honest it was my home for most of my adult life and I just found it a little difficult to let go, stupid as that may seem.

    But I realise that now if she wants to move on that I have no right to stand in her way. The issue is now property prices in that area have dropped. Yet because they have chosen to buy somewhere else it presumably factors in the dip in price, well I know it does as the price of the property they are buying has come down. I am not in a position to buy anywhere else, so after all this time it feels like I will have to pay for the dip in house prices and the hopeless interest rates, unless of course house prices come down even more !!!8211; which I doubt, I think this is a blip, estate agents seem to be blaming it on the Brexit saga ( I have no idea ) so when they finally get this thing sorted out, I suspect house prices will rise through the law of supply and demand, which then will be no good to me as the horse has bolted .... all guessing I know but nevertheless!

    Apologies for going on and on but this is so important to me. The point is, and one of my conundrums, if the property was solely mine I would not be selling as the price has dropped too much ....... so should I be factoring this in when we come to agree the buy out price. We are at the stage where we are just waiting on our third valuation.

    Again I am sorry if this sounds stupid but I have never been involved in anything like this in my life but I am also wondering do we both need solicitors or is the onus on one or the other to take the lead.

    Anyone who has taken the time and had the patience to read this and can offer any more advice ... bless you !
    Originally posted by Cjb777
    1: go see a GP if you are having continuous feelings of anxiety.
    2: Unfortunately, unless you can buy her out, you have no choice.
    3: Yes both get solicitors
    4: You can try to get a few extra thousand in the buy out price, simply because it's cheaper than her forcing a sale...
    • Thrugelmir
    • By Thrugelmir 10th Aug 18, 12:14 PM
    • 61,352 Posts
    • 54,597 Thanks
    Thrugelmir
    • #8
    • 10th Aug 18, 12:14 PM
    • #8
    • 10th Aug 18, 12:14 PM
    You should consult a solicitor and formally resolve your financial separation.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • eddddy
    • By eddddy 10th Aug 18, 12:27 PM
    • 7,260 Posts
    • 7,212 Thanks
    eddddy
    • #9
    • 10th Aug 18, 12:27 PM
    • #9
    • 10th Aug 18, 12:27 PM
    But that now has become irrelevant, my head is spinning ....... they now tell me ( my wife and partner ) that as it stands selling the flat raises insufficient funds for them to buy the house. Now they want to buy me out and do a Let to buy and rent the flat out !
    Originally posted by Cjb777
    This sounds flawed.

    If the flat is sold, using her share of the proceeds, she won't have enough money to buy a house.

    SO... she wants to do a 'let to buy' i.e. buy/own 2 properties instead - the current flat and the new house.

    If she can't afford to buy one property... how can she afford to buy two?

    (I imagine she's being hugely over-optimistic in thinking that rent from the flat will cover an extra-large mortgage on the flat, plus a chunk of an extra-large mortgage on the house. But mortgage lenders probably won't see it that way.)


    Personally, I wouldn't take this too seriously, until she confirms that she has some mortgage offers.


    Or... does she mean a "Let to Let"?
    • TBagpuss
    • By TBagpuss 10th Aug 18, 2:29 PM
    • 6,967 Posts
    • 9,186 Thanks
    TBagpuss
    Could you buy her out? (and sell later if the price goes up)

    You'd need to be able to get a mortgage of 130,000 or so (assuming an equal split of the assets) .
    • Cjb777
    • By Cjb777 12th Aug 18, 2:15 PM
    • 13 Posts
    • 3 Thanks
    Cjb777
    Hi Thank you all so much once again.
    Originally we started with the idea of renting debt free, with her share of the rent contributing to the payment of the mortgage on her new house. Despite all the pitfalls of renting this idea appealed. But they couldn't get a mortgage based on this idea, then things started getting complicated when re mortgaging entered the frame.The only way this could be done was for me to take out a joint mortgage with her on a property where I paid off the mortgage years ago - this is the condensed version ! - so I posted a thread on here as I mentioned in my first post here, and absolutely nobody thought that was a good idea, so along with advice from ex work colleagues that was dropped. The next option was to sell which didn't work, so they want to buy me out to re mortgage part of the flat and let it out. Also buying them out is not an option for me for a number of reasons, financially and the location ..... I am in another county now. Many thanks again to you all and kind regards
    • AnotherJoe
    • By AnotherJoe 12th Aug 18, 2:25 PM
    • 11,863 Posts
    • 13,840 Thanks
    AnotherJoe
    Id just wait and see what they come back with once they have got a mortgage. It doesnt any sense to me that they can buy it to let out but not buy a house to live in (and where are they living now?) and in any case its best not to get caught up in the drama. If they get a mortgage offer, fine sell it to them, clear break, all done.
    As said make sure via solicitor that really is it a clear break as well.
    • 00ec25
    • By 00ec25 12th Aug 18, 3:12 PM
    • 7,334 Posts
    • 7,047 Thanks
    00ec25
    You shouldn't incur any taxes, unless you own another property in which case CGT may be relevant.
    Originally posted by TBagpuss
    on the info presented so far you cannot say if OP will, or will not, have to pay CGT
    - we do not know the size of the gain
    - we do not know how long ago OP moved out to live with his mum in another county, or if he was living somewhere else once the relationship broke down and the separation became permanent (even before a divorce)

    EDIT
    I see in a later post OP states the separation happened 5 years ago, in that case OP is certainly liable for CGT when he sells his share, but how much he will have to pay depends on the actual figures
    Last edited by 00ec25; 12-08-2018 at 8:30 PM.
    • mrschaucer
    • By mrschaucer 12th Aug 18, 4:33 PM
    • 588 Posts
    • 724 Thanks
    mrschaucer
    And therefore any buyout figure should take account of the OP's CGT liability if any, as the ex has had the advantage of living in the flat over the past few years and won't have this problem.
    • tlc678910
    • By tlc678910 13th Aug 18, 9:56 AM
    • 749 Posts
    • 1,175 Thanks
    tlc678910
    Hi OP,

    I think your current goal needs to be to get a fair settlement for half the property (in terms of it's current value) and a clean break (a divorce with full financial settlement). See if your ex can raise a fair settlement (half) and if not get the property sold and split the proceeds.

    It is hard to let go of your dreams of the past (keeping your property as a good investment), but your situation now is not your situation of the past and keeping the property if you can't afford to buy out your ex will only cause you aggravation.

    You mention you moved out 5 years ago - don't let this drag on another 5 years. I think there is every chance property prices will fall at least a little with Brexit even if they then go on to recover - who is going to buy in the months before big changes are made that might cause prices to drop significantly? You don't want to stay in this complicated situation for the long term while that all settles down.

    The most important benefit from moving on financially is that you will then be able to move on mentally and develop new goals and dreams based on your situation now.

    You sound like quite a cautiousand sensible person with your money but I would suggest that when you have your financial settlement you go on a fabulous holiday (perhaps it would be nice to treat your mum) before you get your sensible head back on and decide how to invest the money.

    Tlc
    • Cjb777
    • By Cjb777 13th Aug 18, 12:15 PM
    • 13 Posts
    • 3 Thanks
    Cjb777
    First of all Many thanks to you all again for your continued advice and assistance


    The CGT bit is yet another worry and something I am not clear on. I am living with my Mum the flat is the only property I have, where I am its my mums house. I did move out nearly 5 years ago but after the buy out I will no longer be on the property ladder ..... I had been led to believe, I have no idea, that CGT would only apply if it was a second home.


    Thanks again to all of you
    • Pixie5740
    • By Pixie5740 13th Aug 18, 12:24 PM
    • 13,371 Posts
    • 19,261 Thanks
    Pixie5740
    First of all Many thanks to you all again for your continued advice and assistance


    The CGT bit is yet another worry and something I am not clear on. I am living with my Mum the flat is the only property I have, where I am its my mums house. I did move out nearly 5 years ago but after the buy out I will no longer be on the property ladder ..... I had been led to believe, I have no idea, that CGT would only apply if it was a second home.


    Thanks again to all of you
    Originally posted by Cjb777
    That is incorrect. CGT isn't about how many properties you own it's that you get Private Residence Relief on your only or main home and the property in question hasn't been your only or main home for the last 5 years so you're not entitled to PPR for those 5 years. You do get a CGT allowance of 11,850 this tax year and you will get PPR for the time you lived in the property plus an extra 18 months.
    • Cjb777
    • By Cjb777 13th Aug 18, 1:42 PM
    • 13 Posts
    • 3 Thanks
    Cjb777
    Ah ..... thank you. Sorry if this sounds thick, so if I lived there for 29.33 years I would get PPR for that plus 18 months ?? Heaven knows how you calculate that and how much it will be. But again thank you so much !
    • saajan_12
    • By saajan_12 13th Aug 18, 2:03 PM
    • 1,528 Posts
    • 1,135 Thanks
    saajan_12
    Ah ..... thank you. Sorry if this sounds thick, so if I lived there for 29.33 years I would get PPR for that plus 18 months ?? Heaven knows how you calculate that and how much it will be. But again thank you so much !
    Originally posted by Cjb777
    You get PPR for the time that either
    a) you lived there
    b) was the last 18 months you owned it

    If (a) and (b) overlap, you can't double count any time. Also you need to calculate the 29.33 years as months not years.
    • Pixie5740
    • By Pixie5740 13th Aug 18, 2:16 PM
    • 13,371 Posts
    • 19,261 Thanks
    Pixie5740
    Ah ..... thank you. Sorry if this sounds thick, so if I lived there for 29.33 years I would get PPR for that plus 18 months ?? Heaven knows how you calculate that and how much it will be. But again thank you so much !
    Originally posted by Cjb777
    You will find the mechanics of the CGT calculation here:

    https://forums.moneysavingexpert.com/showpost.php?p=69071134&postcount=6

    You may well find that after taking into account your PPR and annual allowance your CGT bill is zero.
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