Help! Someone who’s good at maths, how much do I owe ExH?

[PuddleCake]

I’ve sold family home and we are splitting the profit (just the profit, not my equity) 70/30 to me. Ex and I have come up with different calculations….

House sold for 710k

I bought it for 327k (this included mortgage of 175k, I have £155k left to pay on it). Ex wasn’t on mortgage and didn’t put any money into sale.

I've spent 100k on renovations, this includes all legal and estate agents fees

Ex spent 27k on renovations

I owe ex 7k from previous house renovation

He is entitled to nothing but as you are nice give him 27k

Based on what you've agreed (the 70/30 split), not getting into the rights and wrongs of that as I'm assuming you are both happy with it, then it should be

Gross uplift = 710-327=383
Minus expenses spent on renovations (100 and 27) =256 gross profit

His share of the gross profit is 30/100256=76.8
Your share of the gross profit is 70/100256=179.2

Plus the £7k you owe him = 83.8

(I don't think he gets back his £27k, nor you your £100k, as these have been spent as part of the renovations, and therefore are not available to be distributed. They were the costs. I think it is this which is confusing matters)

So effectively for the cost of £100K you receive £179.2k
For the cost of £27k, he receives £76.8k
The 7k you need to give him on top.

He's getting a better %ROI than you are.

Oh on reading again it was the sale he didn't put anything in to? Did he pay any of the mortgage off? I still say he's owed less than he wants as it's not in his name. It's how a lot of women screw up with things like this

I think you need to see a solicitor and take advice on what you should give him and on what basis.

There is a risk that you are acknowledging he has a claim to the property and unless that is specifically defined you might the giving him justification to pursue more.

£110,800.

103,000 including him getting his 27,000 back

Very approx:

You put in a deposit of £152K = 46.48%
46.48% of £710K = 330K

£330K equity + £100K investment = £430K

£27K to him

£710K sale - £155K mortgage - £430K to OP - £27K to ex = £98K to split

50% = £49K. So, to allow for £7K to ex, £42K to OP and £56K to ex

So, OP: 430 + 42 = £472K
Ex: £27K + £56K = £83K
Plus 155 to the bank

Only 256,000 is profit surely. You’re sold price, minus the bought for price- the 127,000 used on renovations.

This is what i work out too

Thanks all. He did an awful lot of the work on the house as is a skilled tradesman. He also put in ten years of his life, working weekends, evenings etc and considering we have DC and he needs to start again I’m happy to give him what we agreed. Had he done nothing and just lived here then I would just reimburse the amount he spent.

With the new info, I'm back down to £10k.

I don't think he gets his 27 back as it's already been spent (along with OPs £100k) and deducted from the total uplift to give net profit.
It is the net profit that needs to be split.
The £27k and £100k were the costs of the renovation.

OPs ex may well be legally entitled to 30% if legal documents were drawn up. He may also have done the work himself which may be why his is getting a higher %ROI.

I clearly need to learn to read properly. At 30% that would be 76.6 k. I didn’t take the renovations into account as I assume that’s part of why you’ve agreed to him taking 30%.

I do think you possibly owe him the 7k on top though, depending on what you agreed, so that would be 84.6k

I suppose you could also take money invested out of the picture first. That would make his share of the profit 49.7k plus the 34k he’s put in would come out a little under 84k so negligible difference really.

Sorry I misunderstood that you were puzzled at a typo! I mean £10k. But it was a while ago so that would need to be trebled probably today.

But ... we were married.

The OP isn't / wasn't. Which makes a huge difference. She should have said 'DP' in her thread title and OP.

We need more information.

How much were the mortgage payments in total?

Who paid the mortage payments?

If only one person paid the mortgage payments, were all other bills split equally or did one person pay the mortgage and the other person pay the bills? If there is inequity in how bills and the mortgage were paid, it would be fair to take that into account eg you paid the mortgage but he paid all the bills.

Did he get a share of the profit from the previous house sale if he invested £7k in renovations?

If not, was the £7k a loan to you?

Did you agree that the £7k you owed him would be invested in this property instead of you paying him back at the time?

People are mixing up profit and cashflows here. Per my understanding, you owe him £7k, £27k, and 30% net profit from the house.

30% of net profit after purchase price and renos is £76,800, so I agree with the £110,800 above.

Have you taken account of interest payments on the mortgage too x

I get you and it depends on their agreement, legal or otherwise. But to me those costs are why there is so much profit so I would expect each to get that back same a the other costs they put in. I would view it as part of the purchase price.

But the £27k (and OPs £100K) were spent to make the net profit, and therefore are no longer available to give back.

The net profit being split is the uplift minus the costs. The £27k and the £100k were the costs, and have already been spent and already been accounted for in the calculation to get to the net profit of £256K.

Uplift = 383k
Costs=127k

NET PROFIT=£256k
Split this 30%/70% to give each person's share of the profit.
£7k owed is separate and should also be paid back.

What @mrsm43s said. It breaks down like this:

The original capital outlay was 327, originally funded 152 by you and 175 by the lender. By the time of sale this split changed to 172 from you and 155 from the lender because of the 20 you paid in capital repayments over the life of the mortgage.

Further capital outlay was 100 from you and 27 from ex. Total capital outlay was therefore 327+100+27, ie 454.

Sale proceeds were 710. You get back 172 plus 100, ex gets 27 and lender gets 155. These add up to 454 so profit is 710-454, ie 256.

256 split 70/30 is approximately 179/77.

So you owe ex 77 from this transaction.

With the 7 you already owe him, this makes 84.

Attempt 2:

You owe him £7k. It has nothing to do with the house. So I think we should leave this to the end.

327-175= £152k deposit at time if purchase (plus legal fees, stamp duty etc)
710k-155k mortgage = 545k equity in property today

Your capital input is is 252k (152+100)
his capital input plus was 27k
together these make £279k

545k-279k=266k capital gain
split 70:30 this makes
£186,200 : £79,800

So you would get £252k + £186,200 (total £438.2) and he would get £27k + £79,800 (£106,800).

I would note that your £252k capital input is 90.3% of the total amount that each of you have put in.

With this split, you should get £252 + 90% of the remaining equity and he should get £27k plus 10% of the capital gain (£27,900) totalling £54,900.

Either way, if he gets any equity then he should contribute to the mortgage on the same percentage basis, including the £20k already paid off. So he can 10% of the remaining equity above capital expenditure and pay back 10% of the mortgage or the same with 30%. Otherwise you are subsidising giving him a benefit in the equity.

30% of 155k is £46,500
So 106,800-46,500= £60,300
You might even add in a contribution to the full £175k. This would be:
106,800-52,500. = £54,309

10% of capital gain and mortgage would be
£54,900-10% of 155k (15,500)= £39,400
£54,900-10% of 175k (17,500)= £37,400

Either of these plus the £7k you actually owe him.

As there is no legal obligation, anything you give for the house is a good will gesture.

I don’t understand why people want to return his 27k to him on top of his 30% but the OP doesn’t get her 100k - unless I’m getting confused (not unlikely 🥴). I think the renovation money should be removed completely, particularly if he did a lot of work on the property and just do the 70/30 split on the profit of 250k minus any extra fees that crop up. Plus the 7k from a previous renovation (unless you put money into that one as well).

So I can do 4 different figures, depending on exactly what is agreed! Ranging from £14092 to £64420.

Essentially it depends on how you treat your deposit and how the costs are accounted for.

If you do a straight deduction of numbers as they are with no account for inflation/house price change etc...

£710k - £152k deposit - £155k mortgage -£127k costs =£276k

Split 70:30 this is £193200:£82800 adding back in his costs of £27+7k gives him £116800

If however you treat your deposit as a percentage of the house at the point of purchase you had a 46% deposit. 46% of sale is £326600.

Therefore the calculation is:

£710k-£326.6k deposit - £155k mortgage - £127k costs = £101400 profit

70:30 is £63980:£37420
Plus his costs of £27k gives him £64420.

I'm not sure where you are getting the £100k from unless you are using the %deposit and not including costs but still giving him his costs back (£95520).

Would love to know how this turns out. At the end if the day if you are not married and he is not on the deeds then he doesn't really have a leg to stand on and will ultimately have to take what you offer I guess!

Weirdly, I reached a pretty similar number whilst using a very different method. It’s clearly not 120k although I did initially misread it as them splitting profit 50/50 and came up with a ludicrously high number.

Years of skilled manual labour could certainly give him a legal claim to a share of the house. So could bills paid, if any?

There's no one correct answer to your starting question. It depends how you define profit. But you need to get legal advice and to make sure any agreement will stand.

How much does he think he should get, in pounds? If the 70:30 split was his costing of his time, I'd want that information for any negotiations. If the two of you agree then get the agreement drawn up with legal advice. The question you're asking here can be answered so many ways that it's pointless.