Distribution of the value of the house between brothers
JMV
(Querist) 13 June 2015
This query is : Resolved
Sir,
My brother and I constructed a house on our parental land. My father had given me the ownership of the property so that I can apply for a Home Loan to construct the house. I took a home loan of 8.5 lakhs and contributed 2.5 lakhs cash towards the cost of construction. My brother also contributed 4 lakhs cash towards the construction. The total actual cost of the construction was 15 lakhs if all the above contributions were added. But as I have taken a home loan I had to pay 7 lakhs towards interest on home loan.
Now the current market value of our house is 45 lakhs (I am not including the value of the land as we have equal rights on the parental land on which the house is constructed), and could you please suggest how this 45 lakhs should be split between us. Will it be 11:4 (11 lakhs and 4 lakhs) ratio based on the actual construction cost contributed by us or the ratio based on the actual expenses incurred including interest paid towards the home loan? In that case the ratio will be 18:4 (11+7 lakhs: 4 lakhs).
Thank you in advance.
Sunny Waskar
(Expert) 13 June 2015
11:4 will be better as in the other option u have calculated his interest.
Vidhi Joshi
(Expert) 13 June 2015
Ratio has to be mutually decided by both of you and the same must be recorded in a document to avoid any future quarrels.
Kumar Doab
(Expert) 13 June 2015
Amounts paid by you: amounts paid by him.
Agreed that it be recorded in writing.
Rajendra K Goyal
(Expert) 14 June 2015
Consider the cost of land at present market value and divide it 50:50.
Rest is present market value of the land and may be divided in amount contributed ratio i.e. 11:4. You are taking benefit of interest in amount contributed ratio.
Suppose value of land at present is 30 lacs and construction value would be 15 lacs. If amicable settlement arrived you should get 26 lacs and brother 19 lacs.
Anirudh
(Expert) 14 June 2015
You say that your father gave the ownership of the property (land); you also simultaneously say that you and your brother have 50:50 share in the land. HOW BOTH THINGS ARE POSSIBLE?
Are you going to sell the property or only going to divide the property between both of you equally?
JMV
(Querist) 15 June 2015
Thank you everyone for your responses.
Hi Anirudh, To answer your question.
My father gave me the ownership of the land only to construct a house. I understand your point in legal terms that if the ownership is given to me then I am the owner of the land. But the mutual agreement between my parents, brother and me was that I will pay my brother for his 50% share of the land. Now I am planning to buy the entire land and the house constructed on it by paying my brother’s share on the land and house.
One thing I was not sure was how to divide the value of the house, as I have paid actual interest of the home loan but my brother did not have to pay any interest, but he contributed some cash towards construction. Will I get any benefit because of the additional expense (interest) incurred from me? If the house value is divided as 11:4, then I don’t get the benefit of the interest paid by me, but if the ratio is 18:4, then interest amount is included in the ratio.
