Hmmmm... apologies I may have confused things. I may well have confused myself!
The friend and I actually owned the property 50/50. We paid the mortgage 50/50 - interest and capital and the contract/deeds/title were arranged as such. The deposit split was more of a personal arrangement - in fact he always planned to pay me 4k at some point to balance out the deposit split.
He and I, then wife and I lived in the property for about 3 years and 1 year respectively.
Perhaps it’s best to ignore my half share and quarter share point. What I really need to know is what my gain is, and what my wife’s gain is given that we acquired our shares at different times and at different prices.
As I see it, I acquired half of the property in 2006 for 100k (200/2). I still own half of the property so if it now sells for 230k, I have gained 15k (230/2 - 200/2).
My wife only took her share of the property in 2011 when it was worth about 190k. Her share was therefore worth 95k. If it sells at 230k, her share of that is 115k. So has she gained 20k?
Or do I need to consider the fact that in 2011 the transaction that took place effectively disposed of my share at that original purchase price (200k) and re-acquired the share at the new value (190k) so my gain at that point was -5k, and therefore both my wife and I now base our gain on the 2011 value (which is hypothetical in any case as it was a transfer with no exchange of cash, rather than an actual sale, so the value is based only on the value of the outstanding mortgage liability at that time)?
Or conversely, can my wife simply assume the value of her share to be the 2006 purchase price given that this is the share she took over from the friend in 2011 and it hasn’t actually been “sold” at any alternative price since that time. We all simply assumed the value to be 190k and therefore no money changed hands.
I expect that is as clear as mud! Thanks for your patience