Family / joint-purchase

My friend john signed a contract to buy a house worth 600k with his older brother. Since then the older brother has been granted a mortgage for the full property and john (on his parents recommendation) agreed to buy elsewhere with his younger sister so she could get her 1st step on the ladder also.

Meanwhile the 1st house (almost complete) is now worth 700k. Nobody has suggested to John that his older brother owes him 50k. And John does not want to start a family argument.

John's older brother works in finance, so I'm guessing John is being taken for a ride here.


Any suggestions?

Why? If the house had gone down to €500k would John owe his brother €50k?

Has John paid anything towards to mortgage?

Sarah

www.rea.ie

The house has gone from 600 to 700, risen in value...

Hi Bill

Can I clarify what happened here?

Bill and Brother bought a house for €600k. Before the deal was closed, it had risen in value by €100k. That's a very big jump between signing and closing? What makes you think it was worth €700k? Why did they get a €700k house for €600k?

The second deal is irrelevant and a confusing factor.

Did the two brothers have a written agreement? What did it say about the distribution of profits? Let's say that they bought the house €600k and closed the deal and moved in and lived in it for a year. Then, they sell the house for €700k - they should split the profits. Likewise, if it had fallen in value to €500k, they would split the losses.

If they signed a contract to buy a house for €600k and it genuinely rises in value by €100k before closing, then the profit should be split as well. Brother owes Bill €50k

Brendan

If they signed a contract to buy a house for €600k and it genuinely rises in value by €100k before closing, then the profit should be split as well. Brother owes Bill €50k

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Also there are CGT/CAT implications.

It rose 100k in value because they 'booked' the house befor eit was built. And property prices have risen significantly in the meanwhile.


Is it worth having a family argument oveR?

I assume both Bill and brother would be FTB's given the fact that they were buying together. In this case if they were to split the profits then Bill would lose his status as a FTB. Down the road this would probably result in him incurring an extra stamp duty liability when he purchases with his sister, AND would result in her not being able to avail of her FTB staus on that transaction. Whilst this may not be as much as 50K, the 50K in question sounds like a before costs value which may be much lower in reality.

Basically you'd be going through a lot of heartache in order to line the Govts already bulging coffers, IMO.

Assuming you were to declare your tax liability, which you should.

So nobody seems to think anybody is being ripped off - and basically ur saying 'leave well alone'?

Bill said:

My friend john signed a contract to buy a house worth 600k with his older brother. Since then the older brother has been granted a mortgage for the full property and john (on his parents recommendation) agreed to buy elsewhere with his younger sister so she could get her 1st step on the ladder also.

Meanwhile the 1st house (almost complete) is now worth 700k. Nobody has suggested to John that his older brother owes him 50k. And John does not want to start a family argument.

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I think the problem is that you're not being very clear about your question. 1. John and Tom: If Tom (John' older brother) bought with John and now buys John out (have they paid anything on the mortgage?) then John (I think) is entitled to have the house valued, to have Tom buy John's half for 350K or whatever half the agreed valuation is (have they bought it 50/50?). Tom will have to pay extra Stamp Duty on John's haf of the house which he is buying.

2. John and his sister Jill: John is no longer a FTB and so neither of them will be classed as FTB. His sister will in fact NEVER be able to be a FTB.

John & Tom agreed 2 years ago to buy together and put a deposit on a place yet to be built. Now it is almost completely built & they can change the contracts from 2 people to one b4 the sale goes thru fully, without incurring any cost. (SO it wont cost anyone any stamp duty)

Bill said:

John & Tom agreed 2 years ago to buy together and put a deposit on a place yet to be built. Now it is almost completely built & they can change the contracts from 2 people to one b4 the sale goes thru fully, without incurring any cost. (SO it wont cost anyone any stamp duty)

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Then it was never really John's place, if Im following you correctly. John was never on the final contract (as they are changing that now), John leaves remaining as a first time buyer to pursue property with sister. Yes, the property has risen in value but John is withdrawing from sale (as you said: "they can change the contracts from 2 people to one b4 the sale goes thru fully"). John is owed nothing.

Definitely not worth a family argument.