Buying out sibling’s half of inherited house

spudrick

After our parents died about 5 years ago, my brother and I inherited her house 50 / 50. He’s a lot younger than me, it was his family home, he lived there his whole life, and continued to live there afterwards. I’ve got my own home and am financially independent so was happy for him to continue living there and decide what to do later, whether he wanted to stay or whether we would sell up

He’s now decided to stay and buy my half, so we’re looking to figure out the most efficient way to do so. My half of the house is worth around 300k, I don’t want to end up in a position where after tax and mortgage interest and everything I’m only up 250k while he’s committed to paying the bank 400k. As I said I’m in a good place financially so don’t need the money immediately, I’d be happy to do something like sell 5% of the house per year until it’s fully his or something like that if such arrangements exist. I’m not sure what professional advice you should seek for this scenario - a solicitor or an accountant? Any advice welcome.

Calahonda52

Language important here, it was not his family home, it was his parental home until he inherited it and stayed living there.

Can he service the increased debt and will the bank advance the money.

maybe post over in taxation

Marcusm

https://www.boards.ie/discussion/2058247259/buying-out-sibling-s-half-of-inherited-house

What was it valued at for probate purposes? That will help you determine whether you have a capital gain on which tax at 33% would be due. Realistically your brother will not be able to obtain a standard mortgage n the property unless he acquires 100% outright from the off - this would be an element of “good marketable title” which he would have to acquire to satisfy mortgage rules.

if the probate valuation was substantially below €600k then you may have a significant liability.

standardg60

You can gift your brother 32.5k and 3k per year afterwards tax free

antoinolachtnai

I would be inclined to start with the solicitor.

He May advise you see an accountant. But really you need to develop a spreadsheet of how much you want him to pay each year in return for an increased share and consider what would happen if he stopped paying.

There are a number of future scenarios to consider for the legal side but If everyone is on good terms and there is no bank debt involved it should be workable.

Casati

I wonder if you can sell him the house and also provide him the finance? Technically he buys the house off you for say the 'agreed' market value of 300k but rather than him get a mortgage you provide him a private home loan of 300k. You agree a rate similar to what you are getting on deposit- i.e. a very low rate < 0.5% that will allow him to pay off this loan to you much faster. The house is given as security.

Claw Hammer

https://www.boards.ie/discussion/comment/119121602#Comment_119121602

That might be a breach of the Consumer Credit Act.

TheWonderLlama

You can do it by way of deferred consideration on the sale contract. Go see a solicitor.