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My mother has been paying the taxes and home owners policy for the last 6 years for our shore house. My sister and I have been paying the taxes and home owners insurance (for the last year and half) since my brother bought a house of his on 2 years ago and doesn't use the family shore house.

We want to buy him out but - should we buy him out at the value of the house 6 year ago or current value?

EDIT: The deed is in all three siblings names. Mom has paid the taxes and home owners insurance for 6 years, and then my sister and I payed them for the last year and a half.

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    Who actually owns the house? Also, you say your mother has been paying taxes and insurance, but then you say you and your sister have been paying the taxes and insurance. Which is it? – yoozer8 Jul 15 at 18:44
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    If the brother owns a share of the house, of course you use the current value. If he doesn't own a share of the house, what are you buying out? Who pays what towards the taxes and insurance policy is irrelevant. – chepner Jul 15 at 18:58
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    If you sold the house, you'd sell at current market value and split in 3 (assuming ownership is equally shared). That's how much you would pay normally for a fair buyout. – JB Chouinard Jul 15 at 19:00
  • Consider the alternative, where you buy him out at the value 6 years ago, then you could immediately turn around and sell at market value and pocket the profits (assuming price went up). That doesn't sound very fair does it? – JB Chouinard Jul 15 at 19:01
  • @JBChouinard That's assuming, of course, the house is worth more now than it was 6 years ago. But that's irrelevant; the OP is buying the OP's share now, not six years ago. – chepner Jul 15 at 19:02
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Who pays the taxes and insurance is irrelevant. If your brother owns 1/3 of the house, and it's currently worth (say) $300,000, then you pay him $100,000. What the house was worth at any point in the past isn't relevant either (including if the house as gone down in value; if the house was worth $300,000 six years ago but is now only worth $150,000, his share is only worth $50,000, not $100,000).

Also, your brother is just as responsible for taxes and insurance as you and your other sibling. It would be perfectly fair to deduct his unpaid share of the tax/insurance from the buyout amount. (Note, however, your brother does not have to accept a fair offer to buyout his share.)

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    Arguably since only two siblings were using the house they owed some rent to the third - if it was me, I would consider the insurance and taxes "rent" and call it even, but it depends what their agreement was - it could be argued differently. – JB Chouinard Jul 15 at 19:16
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If you sold the house, you'd sell at current market value and split in 3 (assuming ownership is equally shared). That's how much you would pay normally for a fair buyout.

Consider the alternative, where you buy him out at the value 6 years ago, then you could immediately turn around and sell at market value and pocket the profits (assuming the price went up). That doesn't sound very fair does it?

There are a couple of factors that could affect the fair price in my view but you don't mention them so I assume they don't apply:

Did the house appreciate in value because of major renovations for which he didn't pitch in?

I assume you and the other sibling were using the house, and not making rental income from it?

He hasn't been paying taxes or insurance, but that seems fair since he wasn't using the house, I wouldn't factor that in.

(But really these other things should be settled individually, apart from the buyout.)

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