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Let's say I bought a real estate for $500000 in the year 2020 and is forecasted to appreciate at a rate of 5% per annum. Given the full loan years of 30 years, at the end of 2045, the house price will be sitting at $1.7million.

Now, let's say my brother and I each paid $250000 and $250000 respectively towards the house (sharing), at the end of 2045, how much should me and my brother receive once the house is sold at $1.7million?

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Are you and your brother contributing equally to the upkeep of this house? Are one or both of you living in it? What happens if one of you dies, or moves out? What if one of you wants to sell before the 30 years are up but the other does not?

Such complications generally mean you'd write a document when you buy the house covering such eventualities that you'd both sign. You can and probably should take legal advice on this given that buying a house is an expensive thing to do. Having an agreement now is much cheaper than arguing about it in court later on.

This document would answer the question of who got what and it would be up to both brothers to agree that before the purchase. If they can't agree then perhaps they shouldn't buy the house.

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  • Thank you. This does not represent a real case scenario. I would just like to know the percentage of sharing once the house is sold. Apr 20 '20 at 11:17
  • Whatever they think it should be. 50/50 would seem a good starting point. Apr 20 '20 at 11:19
  • One more question, what about rental income. A house that is in debt and generating monthly rental come say $1000. This means that there is a long term return (from the appreciation) and a monthly passive return (rental). How does the % sharing split happens then? Apr 20 '20 at 12:26
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You don't have enough parameters do calculate the principal left on the loan, as it will depend on the initial downpayment and interest rate.

In 2045, you and your brother will each get half of the $1.7 million minus the principal left to repay on the loan, which needs to be paid back to the lender when selling the house. But there are other fees that will lower your take, for example the seller pays the 6% broker fee, on $1.6 million this starts to be substantial...

Assuming a 20% downpayment, and a 4% rate, the principal remaining will be about $100,000, so you'd each get about $0.8 million.

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  • Thank you for the comment. Yes, it just a simple calculation (at least) to determine some ideas on how the split can happen. Ideally, this will be for investment purpose and I guess there are more factors to it like variable 5% appreciation per annum and ec Apr 20 '20 at 11:19

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