Buy out partners

S

Scanner

Registered User
Messages
48
Hi,

I bought an investment property with my 2 cousins two years ago and they now want to sell. Im looking into the option of buying them out.

Lets say we bought the property for E150 and its now worth E210.
I would have to pay them E70 each.

Would I have to pay stamp duty on the E140?

Is there anything else I should know about before I suggest it to them?

Thanks
Scanner
 
Scanner said:
Lets say we bought the property for E150 and its now worth E210.
I would have to pay them E70 each.
Click to expand...
I would have thought that you'd pay them €70K less one third of the amount outstanding on the mortgage each since that's what all three of you would pocket if you sold today and split the proceeds less the mortgage. I am assuming that the purchase was a straight three way split and no individual was less or more of an owner than any other.
Would I have to pay stamp duty on the E140?
Click to expand...
I presume that investor SD was paid on the original purchase? Not sure what happens now with the partial transfer.
Is there anything else I should know about before I suggest it to them?
Click to expand...
You will need to factor in legal fees and check with the lender that they are OK with you assuming full responsibility for the mortgage. You should also get independent, professional advice in my opinion.
 
Hi Clubman, thanks for your reply.

It was an even 3 way split, each person paid one third of the Stamp duty, one third of the legal fees etc.
The morg is an interest only so the original borrowed amount is still o/s.

What I was thinking was, I take over the morg (with or without the banks approval as the morgage account is with my bank ) of E150 and give them E20,000 each as this is the profit divided by 3.

Would this be a better way to go?

Thanks
Scanner
 
Scanner said:
What I was thinking was, I take over the morg (with or without the banks approval as the morgage account is with my bank )
Click to expand...
I think you will need their approval one way or another if the original mortgage was to the three of you. After all they will know once it comes to amending the mortgage and property deeds to remove the others' names and put everything in your sole name. In any case the terms & conditions of your mortgage probably require you to contact the lender in the event of a significant change in circumstances such as this.
give them E20,000 each as this is the profit divided by 3.
Click to expand...
I would have thought that this was correct.

If your friends had mortgage protection life assurance for this mortgage (not mandatory on investment properties but some lenders still insist) then they can cancel their cover once they are removed from the mortgage.

I would strongly urge you to get independent professional advice on the tax and legal implications of this plan before doing anything.
 
Hi Clubman,

Thanks for that. Yes, it was our family solicitor who looked after the purchase, I will be contacting him regarding this.

I just wanted to get the financials correct before I make any decision.

I presume he will also advise me on the Stamp Duty issue as well.


Thanks
Scanner
 
How did you come to the valuation of 210? Was it based on the last house sold in the area etc or was it from an EA's valuation?
 
You might want to get a few valuations so to determine a fair market value for the purpose of valuing the others' shares in the property. Also you might want to take into account stuff like you getting all of the contents/fixtures/fittings that they may have contributed towards (if that is the case) and so on. Ultimately whatever is acceptable to the three of you.
 
Hi,

I checked with my solicitor and was told that I will have to pay the stamp duty on the buy out amount I have to give my partners.
So if we agree a price of E210 then I pay SD on E140.

Yes, to be fair to my partners we will get a number of valuations.
Had not thought of the contents though.

Thanks for the advice.

Rgds
Scanner.
 
You must log in or register to reply here.
Back
Top