Equity Sharing/Buying a Home with Someone Else By John Biondolillo, BCK Real Estate Company Vermont

By John Biondolillo, BCK Real Estate Vermont

When the home of your dreams is out of your price range, why not buy it with someone else and share the equity. This may sound like college roommate fun, but there are many items to consider when entering into this type arrangement.

The term for co-ownership is called ‘Equity Sharing’. This is when two or more non-married people invest in a house. Sometimes one of the people does not live in the house and merely uses the property as an investment and/or to help out the other person. Sometimes both people are equally sharing the mortgage and up keep as well as living together. Regardless of the situation you will want an ‘Equity Sharing’ or ‘Partnership Agreement’. This will determine who will pay for each item from the down payment to on going repairs and upkeep the co-ownership. There are also tax benefits to coordinate. The IRS will frown on both of you writing off all the interest on your mortgage. You will need to decide how you want the title to be held, (see article called “How to Hold Title”) and what to do when one partner wants out of the property, or worse yet, dies. There are many rules already in place for spouses, but a partnership agreement is akin to a business contract and everything is negotiable.

One benefit to co-ownership is that both incomes and joint cash for a down payment can be considered in getting your loan. Make sure you have discussed at length the future possibility of one of you getting married and wanting to live in the house. Try to think of as many scenarios as possible and have as many clauses to you agreement as you need. A good real estate attorney can help you through this process.

Something else to consider is the style of home since it is being shared. There are many horror stories of good friends never speaking to each other again after they live together. Look for a home where the bedrooms are possibly in different parts of the house and that there are enough bathrooms to go around. A little privacy goes a long way.

With a little thoughtful planning shared equity could give you both more home than you could individually afford and be building equity for your futures.

BCK Real Estate now has Vermont Realtors in six real estate offices in Vermont and if you are looking to buy or sell a home in Barre, Montpelier, Northfield, Waterbury, Rochester and Stowe, Vermont. We are your source for Vermont Real Estate. Email us at info@BCKrealestate.com.  This blog is provided for informational purposes and not intended to take the place of a licensed real estate professional.

You can also contact our individual offices:

BCK Barre VT   86 North Main Street  Barre, VT 05641   (802)479-3366

BCK Montpelier  15 State Street     Montpelier, VT 05602   (802)229-4242

BCK Northfield    17 East Street  Northfield, VT 05663  (802)485-7400

BCK Waterbury    21 North Main Street  Waterbury, VT 05676  (802)241-2000

BCK Rochester      42 North Main Street  Rochester, VT 05767  (802)767-9900

Stowe Realty/ BCK Real Estate  - 254 Mountain Road, Stowe, VT 05672  (802) 253-8484