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Dividing proceeds from house sale - how?

(5 Posts)
SkinnyLove Tue 09-Apr-13 12:44:56

Hi,

I have a problem and need some advice! 15 years ago my dad bought a flat. 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 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. I dont feel like i should have to divide it equally by three however, as I was forced to rent for ten years while they lived there with subsidised rent (and trashed the place to boot).

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?

Sam100 Tue 09-Apr-13 12:54:24

When you bought the flat how much was it? How much did your dad pay and how much did you take out a mortgage for? What is it worth now? If your dad needs the money then why do your sisters get anything? Was it always intended to be for the 3 of you? If so were your sisters also on the mortgage?

Sam100 Tue 09-Apr-13 12:55:09

Also who is the official owner ie on the deeds? Other than the bank!

racmun Tue 09-Apr-13 13:02:20

On the basis you say you couldn't get another mortgage I'm guessing it was in your name but you dad put the deposit in?

If that's the case then you either give him back the same relevant percentage or just the amount he put in - seems fairer to give him the % but that's up to you.

With regard to your sisters I would say it is probably fair that you use the Halifax House price index to work out their share. This will calculate the market increase in the property. Available on line.
Do you have any idea how much it was worth before you did the work? If so use that figure if not calculate using the original purchase price and that date.

I used to have to do this type of thing quite a bit of work as a Property Lawyer. If you want to pm me I'll give you a hand

SkinnyLove Tue 09-Apr-13 13:18:18

thanks everybody....yes, the flat is in my name.

My dad also bought a flat in his mistresses name (dont ask!) and also offered to buy one of my sisters a flat (she said no) so I think that ultimately it was his intention to put down a deposit for each of us. But they got divorced so that plan went out the window. I decided to sell a couple of weeks ago but havent said anything to my family as know that all hell will break loose (and it has).

My dad is down as a subsequent lender. I have offered him 40K (he put in 25k) because I cant really afford to give him any more. 75K mortgage outstanding on the flat, on an underperforming endowment policy (can I compensate myself from proceeds?). The flat is worth now what it was worth before I put in 40k between 2007 and now, so money spent just to tread water.

I want to be fair but obviously also fair to myself. Im slightly annoyed that I need to pay back my dad now when my sisters are sitting pretty in their own bought homes now and while I dont owe anybody anything legally, morally is a difference matter.

thanks for your help

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