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

Capital gains tax should also be deducted from the total value of the house, before splitting it.

710 - 152 deposit - 155 mortgage yet to pay = 403

70% = 282ish
30% = 120ish

He owes you 100K for your renovations, fees etc
You: 382
Him 20

You owe him 27/35/7 depending on what you actually meant by the 27 and 7k numbers
You: 355/347/375
Him: 47/55/27

But as others say, the renovations could form part of the uplift, were costs of running the house, that you both agreed to. then they would not be deducted/apportioned at any point at all

Which leaves you with your split of that 403K
70% = 282ish
30% = 120ish

and you both pay half the fees. Maybe he gets that 7K on top, because I still don't understand what those 2 figures actually mean.

It entirely depends upon what the 2 of you, with or without legal advice, decide you want to do!

No CGT on primary residence.

legally nothing-morally id just give back the 27k

I have to admit, I agree with most of the variations we have all come up with. Most of them seem 'fair'.

Legal advice seems your only way forward.. and yes, capital gains tax if applicable and legal fees to be deducted from the profit margin!

I would round it to £50K including the £7k you owe him and the £27 he spent on the house. So a good will gesture of £16k.

Why?

The £7k - is that to come out of the pot, or dealt with separately?

If it's from the pot, this is my calculation :

House sale £710,000
minus £155,000 to repay mortgage
Leaves £555,000 to be distributed

Of that :

You are owed £152,000 that you put in to the house in the first place (£327k-£175k)

Plus £100,000 renovations

= £252,000

He is owed £27000 renovations
Plus £7000

= £34,000

So, £555,000 minus £252,000 and £34,000 to him, leaves £269,000 profit in the pot.

70% = £188,300 You
30% = £80,700 Him

So you get £252,000 + £188,300 = £440,300
He gets £34,000 + £80,700 = £114,700

Doesn't look very fair.

I don’t think so.
The £27k he put in and the and the £100k OP put in for renovations have to be taken off

£710k selling price - £327k = £383k Is price difference in property from then to now
minus renovations of £100k (OP’s cost)
minus renovations of £27k (exDP cost)
= £256k profit.

The £256k profit split 70/30 is £179.2k for OP and £76.8k for exDP. OP can pay him the £7k owed on top.

This doesn’t take into account who was paying mortgage. Nor does it take into account stamp duty and estate agent fees if when the house was bought/ being sold. But if a 70/30 split on profit is agreed as fair then this is how I would calculate it.

Typical MN answer, had the he and she been reversed she would still expect the OP to walk away with the lot!

This is pretty much how I worked it out.

I make it like this:
Sold for £710,000
Remaining mortgage £155,000
So there's £555,000 total to be split.

OP starts with getting back original £152,000 equity put into house when first bought, plus £100,000 invested in renovations.

Ex starts with getting back £27,000 invested in renovations.

Remainder that is profit £276,000 is split 70:30 so OP share £193,200, Ex share £82,800.

£7000 that OP owes ex comes out of OPs share and is added to Ex's at this point

So the amount owed to Ex is £27,000+£82,800+£7,000=£116,800

Given your good will and willingness to recognise his many hours of work, shoe him the calculations that demonstrate that, including consideration for mortgage contributions, he gets very little. Then say you are however willing to give him whatever you see fit. £54,300 (based on 30%) verses £100k is an extremely generous uplift. He is trying his luck with trying to get any more.

For how long did he have the benefit of living in the house rent free or at a reduced rent compared to the market?

There are different ways to work this out though - but this is one

OK - you bought the house for £327K - but £175K was a mortgage, so the equity you had at that point ( your deposit) was £152k. You also spent 100K on renovations, which may or may not have contributed to the current value of the house. You have also paid off £20k of the Mortgage since you bought it. Your input to the EQUITY in the house is therefore £152K + 100K +20k = 272K.

Your Partner paid 27K for renovations - so that is his input to the equity

You sold the House for £710K - but you still owe £155k on the mortgage, so once that is paid off the available actual cash is 710k-155k = £555K

Your Equity is £272K. Your partners is 27K. The two together is 299K

The amount left to be divided as profit is £555K - £299K = £256K

70% is £179,200 and 30% is £76,800

So you should get £179,200 + £272,000 = £451,200

Your OH should get £76,800 + £27000 = £103,800

But as I say, there are other ways of looking at this - will post another calculation shortly

Not married and house is in your name. You have DC together to whom you will be the primary carer.

I would say don’t sell the house and you can pay him back the £7k as and when. The £27k can be his contribution towards the DC he helped create. I calculate his share of the profit to be exactly £0.

I make it:

£118,000
You purchased a house for and sold for £710,000 so made £383,000 on the sale. But from that sale you need to take out the expenses of £100,000

so that leaves £283,000 so a 30% split of the profit to your ex would be £84,900 profit for you ex and then add in the £27000 in cost he occurred on renovating the house and the £7000 you owe hime bring it to a total of £118,00

So that means your at £283,000 and from that you need to pay your ex expenses of £27,000 which means the profit from the house is £256,000. You have to take all the expenses out first before you can split the profit.

That split for 30% profit to him is £76,800

Then you owe him £7000 so a total of £83,800

Sorry meant to add in-between those two calculations - one is if you don't take out the expenses first and then your ex would get much more money....as you can see by the two calculations

Total capital investment in the property is £279k (your £152k deposit, £100k renovations and fees, totalling £252k, his £27k.

Equity left after sale and redemption of mortgage is £555k. He should get 27/279 of £555k, which I make £53,709.68. Be generous, and round it up to £53,710.

Show him those figures, and he might be happy to accept your offer of just shy of £100k!

I did the same calculations as @Dragonwindow

As we can see there are lots of different ways that your words can be interpretted. This is one way:

You say that only the profit is being counted, not the equity, which effectively takes your mortage out of the scenario. The amount spent on the house itself could also be excluded, as this is arguably part of parcel of living in a house, it depends whether this was material improvments or maintenance or both.

One way of calculating the profit would be take the purchase price from the sold price, e.g. 710k-327k = 383k. This profit is then split 70/30, e.g. 268k to you and 115k to your ex. It sounds like he has done a calculation this way.

What is fair / what is in line with your original intentions? This is a different question but it needs to be answered really. For a start off, the selling costs need to be taken off the profit before any splits are made, e.g. estate agent's costs, solicitor's costs and other charges, e.g. searches, repairs made to secure the sale etc. It does sound like this might end up in court, given the fairly large difference between your and his idea of what is a fair split. It might be best just to bite the bullet and start that process rolling. Mediation might help?

let me see..
so you put in deposit of 152 + spent 100 on renovations.
he spent 27 + you owe him 7

if profit = 710 - (327+127) = 256

if you split that 70:30 --> 179200 to you 76800 (+7k) to your ex DP

but I think this is unfair to you unless he has been paying all the bills and helping with mortgage

more fair would be: you give him 34,000 and tell him to go away. he lived in your house rent free. and now he wants money as well. amazing

The only sensible advice so far. Op, you are in danger of giving away far too much!

Current value is 710, was 327 so appreciation is 710-327=383
Out of that youre 'owed' 100 from your input (renovations/fees) and he's owed 27+7 = 34, so 383- 100(yours)- 34(his) = 249 net profit.
Your mortgage is your affair as is any borrowing he has.
You get 70% of net profit which is 249 × .7= 174.3 k plus your owed 100 is 274.3
He gets 30%, so 249 x .3 = 74.7
Plus the 27 and 7 =108.70

274.3 + 108.7 = 383
Offer him 100k

I don't think you can include the owed mortgage any more than you can include any loans he had (or interest you owe) for the renovations he did/payed for or was owed.
No idea where your 30/70 figures came from but that's what I'd go with.

Its interesting that this comes out so close to the figure I reached when method feels so different.

What about the 155k that the bank is owed?

I’m also not sure why the 127k gets deducted from the profit calculations. If they aren’t part of the profit then each investor should get back their original investment before calculating profit, surely? By taking it out of the profit calculation you are awarding all of it to the OP even though she only made 100k of the 127k investment.

I think either, you take it from the profit and give each person what they put in and split what’s left 70/30 after deducting that and the OP’s 46% equity and the 155k mortgage. Or both parties write off their investment, include the 127k in the profit calculations and split that (again minus the remaining mortgage and OP’s equity) 70/30. Both of these give similar figures of just over 80k to the ex so it makes little real difference in the end.