How should I calculate joint ownership property equity?

Posted on 10 December 2007

I bought my house in 1987 for £20,500. When my wife moved in ten years later the value went up to £55,000, is this £35,000 mine or is it to be split between us with the other equity occurred over the next 10/11 years? She has only been on mortgage for the past 3 years.

Gary

Hi Gary,

I laughed, because that read as if it was moving a wife into the property that increased its value so considerably!

There is not set answer to this scenario, you are expected to come to an agreement between yourselves even if for a divorce or inheritance calculation.

If you want to calculate it as unrelated friends would, just:

1. Decide if you are including her from 'move in' date or 'on mortgage' date, (or in the middle might be a fair compromise if she contributed without being named).
2. Take the equity value (property price - mortgage) from that day. This is yours.
3. Subtract it from the equity total now (price - mortgage) to give you the growth since she joined you.
4. Split the answer between the two of you.

You need to see a solicitor to draw up a formal agreement for you really.

Unfortunately, where finance and matters of the heart are concerned, it is not easy to establish what is 'fair'. My poor (divorced male) colleague here tells me that if you do calculate in this way, the other party may propose billing methods for any of their time, or children, you have used in the time...

So best of luck!

Category: Separation or Divorce

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