Buying Siblings Out/Maintenance issues

Seapoint1971

Hi,

The situation:

1. I am currently going through a separation and am still living in the house that my ex and I rented together. We divide the kids' time between our two houses (both rented).

2. We/I have had a mates rate for the past six year but now my landlord wants to review the rent, which he is entitled to do. He wants another €300 per month which will only be possible if my ex ups my maintenance, which he is unlikely to want to do.
The landlord has also informed me that he will be moving back into the house in two years time.

3. My mother recently died and left a house to me and my three brothers. It is down the road from where I currently live. It is a small house - too small really for me and my three boys, but I am investigating the possibility of extending it. The location is excellent. It has not been valued yet but I am estimating €450k - €500k. I own a 1/4 of it. It is currently rented for a good rent of €1800 per month.

4. Once my ex and I divide our assets, I will probably have close to €600k in cash.

My questions are:

1. Should I buy my brothers out as I will never get a house in this location for 3/4 of the value (I already own 1/4), particularly if I can extend it?

2. Is it possible to agree on a value now with my brothers but not actually pay them until probate has been agreed?

2. If I put all my savings into the house, I am debt free and rent free but have no money left to put into a pension/rainy day fund. Does being rent and mortgage free mean my ex can reduce maintenance payments based on the fact that my outgoings are substantially less?

4 Should I put all the money into the house or is it worth applying for a mortgage for some of the value?

5. Would I get a mortgage given that I am only on a 6 month contract, which may be renewed for another 6 months in August? I am 47.

6. Should I at least rent my mother's house in the meantime, even though it is very small compared to where I am now, thus avoiding my rent hike and indeed saving on rent? Do I have to make the move to smaller accommodation or my ex, if my rent goes up?

Any advice would be most welcome,

Thanks

Eric Cartman

Seapoint1971 wrote: »

Hi,

The situation:

1. I am currently going through a separation and am still living in the house that my ex and I rented together. We divide the kids' time between our two houses (both rented).

2. We/I have had a mates rate for the past six year but now my landlord wants to review the rent, which he is entitled to do. He wants another €300 per month which will only be possible if my ex ups my maintenance, which he is unlikely to want to do.
The landlord has also informed me that he will be moving back into the house in two years time.

3. My mother recently died and left a house to me and my three brothers. It is down the road from where I currently live. It is a small house - too small really for me and my three boys, but I am investigating the possibility of extending it. The location is excellent. It has not been valued yet but I am estimating €450k - €500k. I own a 1/4 of it. It is currently rented for a good rent of €1800 per month.

4. Once my ex and I divide our assets, I will probably have close to €600k in cash.

My questions are:

1. Should I buy my brothers out as I will never get a house in this location for 3/4 of the value (I already own 1/4), particularly if I can extend it?

2. Is it possible to agree on a value now with my brothers but not actually pay them until probate has been agreed?

2. If I put all my savings into the house, I am debt free and rent free but have no money left to put into a pension/rainy day fund. Does being rent and mortgage free mean my ex can reduce maintenance payments based on the fact that my outgoings are substantially less?

4 Should I put all the money into the house or is it worth applying for a mortgage for some of the value?

5. Would I get a mortgage given that I am only on a 6 month contract, which may be renewed for another 6 months in August? I am 47.

6. Should I at least rent my mother's house in the meantime, even though it is very small compared to where I am now, thus avoiding my rent hike and indeed saving on rent? Do I have to make the move to smaller accommodation or my ex, if my rent goes up?

Any advice would be most welcome,

Thanks

I would hope so, considering what you're potentially getting , it sounds like you should probably be paying him.

the_syco

Seapoint1971 wrote: »

I am currently going through a separation and am still living in the house that my ex and I rented together. We divide the kids' time between our two houses (both rented).

I don't think it'd be a good idea to buy the house until the separation is complete.

As for maintenance, it depends on if the amount was set by the courts or not.

Seapoint1971

The separation agreement should be completed in the next couple of months and this will include a maintenance agreement going forward.

Eric, we are going 50:50 on division of assets. He, however has a six figure salary built up over years while I was at home. I am now starting at the bottom of the salary ladder.

Eric Cartman

Seapoint1971 wrote: »

The separation agreement should be completed in the next couple of months and this will include a maintenance agreement going forward.

Eric, we are going 50:50 on division of assets. He, however has a six figure salary built up over years while I was at home. I am now starting at the bottom of the salary ladder.

and fair play to him, but you're the one asking how to keep the gravy train a flowing when your outgoings are severely reduced.

boege

OP
If your brothers do not need the equity in the house right now, you and your brothers could look at retaining ownership of your mothers home and treat it as an investment property. What you might consider is separating the rent of the property (to you) from its ownership (in which you would have a share). You and your brothers could also mortgage the property to refurb/extend.

The rent on the property can be used to first clear any mortgage and any surplus split equally. If you have to move, someone else rents, or you sell. If one or more brothers want out then you may want to have first option to buy out their share.

My advice is speak to a good financial (and legal) adviser as you have a good few options here. The amounts of money involved are also significant and there could be tax implications.

Hope the separation works out for you.

fritzelly

Chances of a mortgage are pretty much zero

You have savings enough to buy out your siblings - curious what you mean by you have enough savings to buy the house if you were never working, where did all this money come from?

Not sure why you should expect an increase in maintenance payments if the kids are divided equally between you and you have also just inherited, I guess, a portion of a substantial asset - kinda agree with the other posters above about having your cake and eating it.
On top of that others may want the house as well - could end up having to just sell it and divide the assets (minus the inheritance tax or did you forget that?)

Seapoint1971

Thanks for your replies.

Seapoint1971

@Fritzelly, "all this money" comes from the division of joint marital assets abroad (property). we never bought here but did when we lived elsewhere. That's divided 50:50.
Inheritance tax not applicable to my and my siblings - we don't reach the threshold.
Was not looking for an increase in maintenance. It is for the kids anyway.
I was simply looking for advice on most financially savvy way to buy my brothers out, if they agree.

Fol20

Seapoint1971 wrote: »

@Fritzelly, "all this money" comes from the division of joint marital assets abroad (property). we never bought here but did when we lived elsewhere. That's divided 50:50.
Inheritance tax not applicable to my and my siblings - we don't reach the threshold.
Was not looking for an increase in maintenance. It is for the kids anyway.
I was simply looking for advice on most financially savvy way to buy my brothers out, if they agree.

How is it for the kids. You can buy the house outright. Still have money left over for the kids. When you have 600k in the bank. Surely. You could “get by” to provided for the kids with that type of money

Fol20

Personally. Depending on your financial situation. It might be better to get a different place as any family feuds might come up when assets are separated. For example if your trying to get a good rate on the purchase of this place I know I’d nearly prefer to let it on open market so I could get the most for it.

From your post. It looks like you want all the up side but none of the down side

The_Conductor

boege wrote: »

OP
If your brothers do not need the equity in the house right now, you and your brothers could look at retaining ownership of your mothers home and treat it as an investment property. What you might consider is separating the rent of the property (to you) from its ownership (in which you would have a share). You and your brothers could also mortgage the property to refurb/extend.

The rent on the property can be used to first clear any mortgage and any surplus split equally. If you have to move, someone else rents, or you sell. If one or more brothers want out then you may want to have first option to buy out their share.

My advice is speak to a good financial (and legal) adviser as you have a good few options here. The amounts of money involved are also significant and there could be tax implications.

Hope the separation works out for you.

The rental income is taxable income for all the siblings- regardless of whether, or not, its one of them paying it.

Either buy-out the other 3 siblings- at market rate- or sell the property- its going to be a noose otherwise.

Also- your quarter of the rental income from the unit- even now- if you're on the higher tax band and the property is mortgage free- could be as subject to tax as high as 53% (USC being due on the gross rental income- not the net- etc etc)

It would seem to me- the logical thing to do- is precisely as you're proposing- purchase the 3/4 of the family home from your siblings (providing they're happy to sell, of course)- and extend. All the while you're doing this- suck up the rent rise where you are- for the duration of the renovations- before you move into your own home.

I'm not going to comment on the maintenance part of the query- because its not an area in which I have any experience or competence- I would simply suggest you deal with it professionally- and try to keep things as amicable as possible, for the sake of the children.

The possible crunchpoint here- is do your siblings want to sell the property- or would they rather continue letting it. I'd strongly advise they sell it- at open market rates- to you- ideally and most cleanly- as part of the probate of the estate (as it'll get messy afterwards). Being a landlord- is not a part-time activity- nor is it for the fainthearted- if you can avoid it at all- I'd strongly suggest you do your utmost to do so.

Fol20

Conductor. I didn’t think usc was on gross income but rather your gross income less current expenses but not capital allowances?

Sleeper12

Seapoint1971 wrote:

2. Is it possible to agree on a value now with my brothers but not actually pay them until probate has been agreed?

When you actually inherit the house it will be valued. If you pay below this value, the difference between what you pay and the true value is taxable.