mortgage payoff

[rreale]

Me and my partner sold a house for a net of 125,315.59 in October of 2014. My partner took the entire proceeds of $25,315.59. We gave the buyer a 100,000 mortgage at 5% amortized over 25 years. the monthly payment was 584.29. All 73 of the payments went to me, I did not share any of the principle or interest with my partner. Approx. November 14, 2020, the mortgage was paid off. Me and my partner both received a check for $42,793.57. The loan balance at time of payoff was 85,480 and interest due was 107.13.
So that me and my partner split the proceeds of the sale 50/50, how much does my partner owe me?

thx

 

[Cubist]

So that me and my partner split the proceeds of the sale 50/50, how much does my partner owe me?

This sounds like a problem with real money at stake. Is there a contract between you both that states exactly who gets what and when? In other words, is there an agreed method for dividing the proceeds of the transactions? If so then you could post back with the details, and then post your own calculation here and someone might look it over for any obvious errors. But personally I'd advise you to engage a professional to answer this kind of question.

 

[rreale]

It should be a 50/50 division. So if there was no mortgage, we would have both received 62,657.79 at the 2014 closing

 

[Cubist]

Payments have been received on different dates which potentially makes this more complicated. Consider one such payment:- your partner received $25,315.59 in 2014. Perhaps they invested this amount, and today the money might have grown to, say, $27,000. Does this mean that today you are owed $12,657.80 or $13,500.00 for your 50-50 share of this single amount? Does your agreement specify anything about this?

 

[rreale]

Payments have been received on different dates which potentially makes this more complicated. Consider one such payment:- your partner received $25,315.59 in 2014. Perhaps they invested this amount, and today the money might have grown to, say, $27,000. Does this mean that today you are owed $12,657.80 or $13,500.00 for your 50-50 share of this single amount? Does your agreement specify anything about this?

 

[rreale]

the 25,215.59 is my partners money, they can invest anyway they want, thats what we agreed to. But, i do owe the partner interest on their share (62,657.79 - 25,315.59 =37,342.20), roughly 2k per year.

 

[Cubist]

A very naive way of working out a settlement would be to ignore the fact that the value of money changes over time. If you do this, then you can simply add up ALL the money that you recieved (regarding this deal) and call it A. Add up ALL the money your partner received and call it B. I assume neither of you made any outgoing payments. Then, hopefully A + B will be greater than the original value of the house otherwise something will have gone wrong with the mortgage deal. For a 50-50 split the amount that each of you should end up with is (A+B)/2. To achieve this, just pay your partner the following amount...

A - (A+B)/2

(If this amount turns out negative, then your partner should pay you)

NOTE: Since this involves real money, I don't guarantee that my posts are correct. I recommend that you seek the advice of a professional accountant.

NOTE 2: The above is naive because the value of money does change over time. In post #4, I was trying to make the point that a dollar in the past usually has an equivalent value today of greater than a dollar (caused by interest rates/ inflation). If you want to take this into account then you'll have to calculate a "present value" for every amount that was received (or paid) over time.

Either way, you'll have to perform the calculation yourself (and if you want, then you could post it back here to see if anyone is willing to check it for mistakes).