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

Oh I see he is your partner.

When you bought, did you not get a Deed of Trust done by a solicitor?
That would have ring fenced your equity.
I still think that you should consult a professional.

Indeed.

I agree with this for the most part except I think the £155k mortgage needs to be deducted from the profit, not from the OP’s share. The OP isn’t getting that money, it’s going to the bank. Our calculations would line up pretty much exactly apart from that that (because coincidentally the OP’s original equity was about 46% and the original purchase price was also about 46% of the price they’ve sold for now). I don’t understand why you’re awarding the ex a 30% share of £155k that the OP didn’t get.

I'd allocated all of the equity brought forward into the property to the OP, not deducted it.

£327k purchase price less £155k owed on mortgage = £172k equity that is wholly going to the OP after the profit share split. OPs is £272.2k so she will end up with £444.2.

I think if you spent a small amount of money on an interview with a solicitor - just to take advice - it would be well worth it. Some of these calculations are far too generous.

I do agree, it is extremely generous.

£125,800
£110,800 IIII
£107,200
£ 89,800
£85,400
£83K
£81,750
£74,700
£67.3k
£64,300
£34,000 III

Hmm. I assume avoiding lawyer's fees and trying to keep things amicable is why you are asking for advice but a lawyer will protect your rights more than we can.
A friend of mine was not married but their partner lawyered up big time and took half the house value when they split because he had done all the work on it.
That's not the case here though.
What figure did you have in mind OP and what did your ex think was fair?

Are we really advocating that people renege on an agreement to share equity with their child’s other parent, who pulled their weight and made a significant contribution to renovating a shared home (physically as well as financially) and contributed to the household bills for a decade? What impact do you think that will have on the co-parenting relationship and welfare and wellbeing of the child?

Would you say the same if it was a father asking about whether he should give the mother of his child the equity they agreed to after she made a similar contribution? I think he’s asking for too much, but I don’t think it’s unfair for him to ask for a share of the profit (not the OP’s equity).

So in the (at least) ten years you have lived there, you've paid off 20k of the mortgage? Was your 100k for renovations added to your mortgage too?

You've said his name wasn't on the sale. But you haven't said he didn't contribute to the mortgage (or pay into the account it was paid from)?

He's paid 34K toward renovations but also "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".

Obviously you keep your deposit and mortgage payments made from a sole account. After that it gets a lot murkier, and I don't agree with posters who say he should feel lucky with whatever you are willing to give him over 34K. You haven't given us enough information on household finances to judge. But he should take legal advice on beneficial interest in the house. If he was supporting you(?), and adding significantly to the sale price with skilled labour over ten years, the 120K which is being quoted as upper limit here may not be unreasonable.

When did you agree the 70:30 split?

£48,600 rounded up to £50k (take it or leave it, is what I'd be offering in the first instance) If refusing, lower it to £34,000
£81,750 as higher offer (if his figures were very different to mine) or whatever number is between yours and his.

Except I would see a lawyer to find out what he is actually owed before trying to short change him or myself

We don't know whether this man contributed to mortgage payments, whether he was sole financial provider for other family expenses, how much value his ten years of skilled labour renovating the house added, or even whether he paid OP rent. We need more information to judge whether this is a generous arrangement or not, and OP and partner both need legal advice.

"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"

Ah, it is the case then as my friend, but she wasn't in the UK. He got half the full value of the house.

How far off are our figures OP?

Profit is cost to buy minus income from selling.

You put in £152k deposit plus stamp duty and legal fees. You then spent £100k on renovations. Total 252k plus stamp duty and legal fees to buy. He put in £27k. This is the total cost to buy.Total spent is £279k plus stamp duty and legal fees.

You could also reasonably include the cost of mortgage on this as you've paid it to own the property. You would then need to balance that with his contributions to bills, etc.

House is now worth £710k minus fees to sell and mortgage of £155k. Total £555k minus legal fees to sell and estate agent fees.

Profit is £555k minus fees to sell minus £252k minus £27k minus stamp duty and legal fees to buy. I make that £276k minus stamp duty and fees to buy and sell.

You then calculate that lot and divide by 10 then times by 3 for what you'd give him. Maybe £250k ish profit once you've taken off estate agent fees and solicitors fees and stamp duty. So you'd owe him around £75k.

You then add the £7k you owe him to this.

If he's getting £120k he thinks there is £400k profit which suggests he's ignoring the mortgage totally.

Aah… now I get. I think it’s because we’re using different definitions of the word equity.

You’re working with the idea that her equity is the amount of money that she put into the property, whereas I was thinking of equity as her stake in the house when she bought it.

So you’ve got her equity as her £152k deposit plus the 20k she paid of the mortgage whereas I was thinking of the 46% stake that she owned when she bought it. I now understand much better how he’s reached the higher figure. Interesting.

If OP has paid off only 2K a year on the mortgage (max - the 20K could go back longer than the relationship):

Did the 100K for renovations get added to the mortgage?

Or was DP or someone else contributing to the mortgage?

Because DP seems to have paid more for renovations than OP paid on mortgage over this time. £150 a month seems very low as a mortgage repayment, or was it interest only?

I don't understand those saying adjustment for the renovations cost. Surely the generic if that is reflected in the increase sales price that would not be achieved with those the renovation work.

Rather than spending more to settle it, could you propose splitting the difference of you both want to remain amicable? Makes life a lot easier.

Thinking about this, when DP and I bought we had an unequal deposit. I seem to recall that he put in roughly double what I did, although we’ve always split the mortgage equally. Our agreement is that, should we sell, we will each take back our deposit from the total before splitting the remaining equity 50/50. I remember thinking at the time that it was very generous of him not to ask to preserve his 15% of the equity vs. my 7.5% (or whatever the exact figure was). We talked about it and weirdly he was the one who argued for the deposit only, whist I argued for him to take the %. We’re joint tenants, but also made an agreement regarding how to handle the deposit money in a sale. I have no idea if it’s properly legally enforceable, but I’d have no intention of trying to renege on it. In fact, I still think us each taking back our original % share first is a fairer way to do it, even though it would probably leave me with something like £20k less were we to sell tomorrow. It seems wrong to me that the OP’s original share of the equity not be preserved.

Try it this way:

house bought for 327 of which

172 came from person A
155 came from person B

then

100 of renovations paid by person C
27 by person D

think of them as all different people who have to be repaid before calculating profit

House sells for 710
pay each of those 4 people what they paid in first
the OP is both A and C so gets 272 to start with
bank gets 155
Ex (D) gets his 27

710-(327+100+27) = 256

this is now profit

Of the 256
OP gets 70% 179.2
Ex gets 30% 76.8

so in total OP gets 179.2 + 272 = 451.2
Ex gets 76.8 + 27 = 103.8

after that OP pays the other 7 she owes ex so in the end she has 444 and he has 111

rights or wrongs of that split are up to OP but I think that correctly expresses 30% of profit plus repayment of costs

Hi all, I do feel it’s fair. If it was the other way round and for example I’d helped him increase his financial worth by working on his business in my spare time over years then I’d expect a share, especially as we have DC. Obviously I don’t really want to give him more than 100k but if that’s a fair calculation then so be it.

I also think if I go back on the agreement now it will really sour things between us and probably permanently, which will be awful for the DC.

What's his calculation? (Apologies if you've already posted it.) Looks like most calcs are coming in 85-115, so perhaps 100 is a good compromise figure. I think it's a bit high, but then perhaps the good relationship is worth it for the children in the long run.

Obviously get legal advice before agreeing to anything.

Out of curiosity what figures did you and your ex come up with?

OP thought 100k her ex 120k
Sorry Op, I'd missed you said that earlier

So I came up with this….

710k - 327k (purchase price including mortgage) = 383k

Minus 100k to Me
Minus 27k + 7k = 34k to Ex

Leaves us with 249k profit

Split 70/30 = 174k/74.7k

Me 174k + 100k + 172k equity (purchase price minus 155k mortgage) = 446,000
Ex 74.7k + 34k = 108,700

Seems more than fair. Where's he getting the other 11.3 from?