Scenario: You own a home together. One of you wants to stay, and the other wants to move on. You’re not trying to “win” — you just want a number that feels fair and doesn’t turn into months of stress.
First: what a buyout actually is
A buyout is two things happening at once:
- Equity changes hands: one person is paid for their share of the home’s net value.
- Responsibility changes: the person keeping the home becomes responsible for the mortgage and ongoing costs going forward (often through refinancing).
Most of the difficulty is not the arithmetic — it’s agreeing on the assumptions.
Step 1: agree on a valuation method
Pick a method you both trust, and write it down before you see the number. Common options:
- One appraisal from a mutually agreed appraiser
- Two appraisals, averaged (especially if the relationship is tense)
- Market comps (recent similar sales) if you both feel comfortable
Tip: Agree on a date (“valuation as of June 30”) so you’re not chasing the market week to week.
Step 2: estimate net equity
Net equity is the home value minus debts and costs you’d reasonably account for in a buyout.
A simple template:
- Home value (from Step 1)
- Minus: mortgage balance
- Minus: other secured debts (e.g., HELOC) if applicable
- Minus: transaction costs you agree to include
Example: Home value $800,000. Mortgage balance $500,000. Agreed costs $10,000.
Net equity ≈ $800,000 − $500,000 − $10,000 = $290,000.
Step 3: decide how equity is split
There are a few common “rules.” None are universally right — the best one is the one you both can explain and accept.
Rule A: split based on title (e.g., 50/50)
If you’re on title 50/50 and you’ve treated the home like a true joint asset, this is the simplest path.
With $290,000 net equity, each share is $145,000. The buyout amount is $145,000.
Rule B: return down payments first, then split the remaining equity
This is common when the down payment contributions were very different, but the monthly costs were roughly shared.
Example: You put $120,000 down. Your co-owner put $30,000 down. Total deposits: $150,000.
If net equity is $290,000:
- Return deposits first: you get $120,000, they get $30,000 (total $150,000)
- Remaining equity: $290,000 − $150,000 = $140,000
- Split remaining 50/50: $70,000 each
Total shares: you get $190,000; they get $100,000. Buyout amount is $100,000.
Rule C: contribution-based (track what each person paid into equity)
Some pairs treat equity like a ledger: down payments, mortgage principal, and agreed renovations increase ownership. (Interest and day-to-day living costs are often treated separately.)
This can feel fair when contributions were uneven over time — but it requires records. If you don’t have records, decide whether it’s worth rebuilding them.
Step 4: handle “adjustments” openly
Adjustments are the small things that can cause big fights if they’re handled implicitly.
- Renovations: Was it an agreed improvement to the asset, or a personal preference upgrade?
- Uneven monthly payments: Was it a gift, a loan, or part of an agreed split?
- Personal use: Did one person live there longer alone? If so, was rent discussed?
There’s no perfect answer — the goal is to make the assumptions explicit.
Step 5: sanity-check the outcome
Before you commit to a number, check two things:
- Affordability: Can the person staying actually carry the mortgage and costs alone?
- Reality check: If you sold instead, would the leaving person likely walk away with more or less after fees? If it’s wildly different, revisit the cost assumptions.
How Partnered helps (lightly)
Buyouts are much easier when your shared finances weren’t a memory game. Partnered helps by keeping a clear record of contributions and shared costs over time, so you can move from “I think I paid more” to a calm, factual view — and then apply whatever split rule you both agree on.
Next, read How sale proceeds are typically split or What happens if one person wants to sell?.
Note: This guide is educational and not legal or tax advice. Rules and costs can vary by province and by your exact situation. If you need advice specific to you, talk to a qualified professional.