Brother offering to sell house at price he bought it for 2 years ago

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kennyFTB

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I'm just wondering, apart from doing business with a sibling, is there any drawback on my brother selling me his house for the price he bought it for. If you're wondering why he's a nice guy and would prefer that if he does sell house(currently rented as he has moved abroad) it would go to a family member. There will be a legal agreement drawn up to split profits in half if I buy and decide to sell within a certain time frame. Any help would be appreciated
 
Bear in mind that CGT (if applicable) and stamp duty (if applicable) will be calculated on the fair market value and not any discounted price. One advantage of this transfer is that it would benefit from SD consanguinity relief which means that SD will be charged at half the normal rate between blood relatives.
 
You need to approach this as a purely financial transaction; Is this the right house for you at this time? Is the price good/high/low? What else could you buy with the same money? I'm guessing you'd both need to use separate solicitors. In the current market, I'm not sure that the same price as 2 years ago is good value for money.
 
Personally I think that anyone who decides to sell a property not on the open market then they are nuts.

Inevitably someone is gonna be up/down thousands of euros.
 
have you looked at other houses in the area to see if the price is a fair one. Just cause he's your brother doesn't mean you are getting a fair deal. The " legal agreement drawn up to split profits in half if I buy and decide to sell within a certain time frame" I don't understand that. Tough if he buys and you sell in a year for more thats a bit weird. What if you decide to sell in a year and you loose money will he give you half?
 
Thanks for the comments, much appreciated. The price he paid for it is 250k and for the area it's in it is definitely a good price. Prices in the area for his house would be circa 320k at the present time and at most would fall 20 or 30 k given that it's close to cork city and just a nice area in general. I understand your comment anout the iffy legal agreement and that is something that would have to be talked about a bit more in detail. I suppose i was just looking for general opinions on the idea of it really. Thanks again
 

What defines fair maket value in the current market? Its only worth what some one will pay for it. There is now a real dabate that houses are not worth the current asking prices. So how do the government state their case with that one?

Note: this is not a comment or question about house prices is about SD and CGT costs when buying and selling a house.

Jaid
 
The Revenue will apply their own determination of fair market value, i.e. your brother cannot sell you a property that would cost €400,000 in an arm's length transaction (i.e. between unrelated parties) for €200,000 and expect Revenue to accept €200,000 at fair market value.
 

How do they define what a property is worth and what the fair market value should be? Is there a calulator similar to the VRT one that applies to property?

Jaid
 
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AT a guess I assume they would get a reputable auctioneer to value it.
 
Also - by the way - to the OP,I don't think you should allow your brother sell it to you below market value as he is being serously taken advantage of by you.

If he sold it on the open market he could sell for €320k you say - that is €70k more than what he is selling to you.

Saying he's a nice guy doesn't qualify it in my book.

In my opinion he's just plain mad/seriously naive.

Effectively he's just throwing away tens of thousands of euros for no good reason other than so he can feel good about himself.
Folishly throwing away that amount of money is not "nice guy" behaviour - it's stupid guy behaviour - and you allowing him do it is certainly not nice guy behaviour.

That whole deal is just iffy all round what with these side agreements and all.

I would suggest forget that yee are siblings and buy it off him for the market value if you really want the house as a proper business transaction.

You also have to ask urself would you be prepared to buy it for market value?
If your answer is no then it shows you are definitely taking advantage of him by only being prepared to purchase at seriously below market value.

There's every possibility that he may wake up some day next year and realise he was taken for a sucker - and make no mistake he is being taken for a sucker whether either of yee realise it or not at this point - and may well hold a grudge against you in the fture when he realises he's out of pocket €70k.

Bare in mind if only your name is on the deeds then only you will be able to borrow using the house as collateral in the future - he won't. That in itself is a massive thing for him to forfeit for no good reason. CLearly neither of yee have thought of that either.
You're definitely gettin the good end of this deal by a long shot.

My advice is back out of this agreement or else pay market value by agreeing to matching the highest bidders offer on the open market. Otherwise the whole thing is messy on a lot of levels.

And lastly - any legal agreement yee draw up to split profits in the event of you selling won't be worth the paper it's written on if only ur name is on the deeds.Granted I assume it's very unlikely you will rip him off - but you may as well save urself a trip to the solicitor on that issue anyway.
 
I know someone who bought a house in Dublin a few years ago and moved abroad, sold the house to her brother for a 'fair' price, less then the market value as he was her brother and she 'loved' him etc. When he sold it 9 months later at a huge profit (more than 100K) she was not best pleased. In fact she's still not talking to him particularly as he didn't give her any of 'his' profits which for some reason she felt entitled to as she had been so nice to sell it to him in the first place and she had made the huge assumption (in my opinion) that he was going to keep the house forever.
OP - Whatever you do and whatever price you agree make sure you both write down what your expectations are so afterwards if the house goes down in value you don't feel aggrieved that he diddled you and if it goes up sky high your brother doesn't feel you owe him something for having sold it at less than market value.
 
Jaid79 said:
How do they define what a property is worth and what the fair market value should be? Is there a calulator similar to the VRT one that applies to property?

Jaid
Click to expand...


There isn't an online calculator available as far as I am aware, I'm sure one of our solicitor members will be familiar with the process. Revenue would have access to recent selling prices (through stamp duty records) for starters.
 
Market value is what a willing purchaser would pay for the property. Most solicitors/auctioneers would be able to tell you whether a figure mentioned on a property locally to them is a fair market value or an undervalue. A 1m price house being sold for 500K will never wash.

Of course, values vary - but if there is such a significant variation on a similar property locally, then if the deal is investigated, it must stand up to scrutiny.

People forget that stamp duty is a form of self assessment tax. Stamp duty is payable by a purchaser on a purchase on the market value of the property. Revenue may or may not accept a valuation - even if they do, they can still come back at a later stage to examine it - it does not happen that often. The real issue lies with serious undervalues even when supported by a valuation.

I row with clients the whole time who try to persuade me that a property I know to have a value of e.g. 450K can sell for 381K. Who will ever know? Whats to stop a purchaser and vendor agreeing? Etc.,etc.

Solicitors are involved - we do carry a secondary liability for stamp duty payment. In the end its just not worth the aggravation.


mf
 

An alternative interpretation is that the brother is taking advantage of the OP.


If you ask yourself this question, the answer may well be "no". And the brother knows this. Because in his heart he knows that there may be difficulty selling the property in the current climate. He may have to accept a major price drop, or wait a long time to get any sort of "reasonable" bid at all.

By selling to you at a "reduced" price, and appealing to brotherly love, he's guaranteeing himself a quick and hassle-free sale. Furthermore by insisting on a split/share on any future profits from a future sale, he's hedging his bets.

Of course, this is all speculation and nobody knows who would actually stand to gain most if you go through with the purchase. But whichever way you interpret it, the same advice holds. Forget discounts, deals etc. Ask yourself would you be willing to purchase the property at the "current market value". If the answer is no, then tell your brother nicely that you're simply not interested, and there's no point in trying to structure a "deal".
 
CCOVICH said:
There isn't an online calculator available as far as I am aware, I'm sure one of our solicitor members will be familiar with the process. Revenue would have access to recent selling prices (through stamp duty records) for starters.
Click to expand...

Is the recent selling prices (through stamp duty records) public information? If so how do the public access it?

Jaid
 

Now that is naive.
 
Thanks for all the advice. I've thought about it for a while and I don't think I;m going to go through with it. Understand the dweebs comment bout being naive and think I'll just hold off on the whole house buying thing for another while. This post will be deleted if not edited immediately If it's this stressful thinking about it god help me when I actually do it! Thanks again
 
For future interest as well regarding selling at below market value. Does one have to submit said value for acceptance by the revenue before marketing the property?
 
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