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Joint Ownership Of A Property

Normally, a family will buy a rental property in the name of the person who earns the most income.


They believe that the initial rental losses that can occur when negatively gearing a property are best allocated to those in the higher tax rates who can save the most tax.

What people do not consider is what happens later on – when the property is sold. This can trigger a huge capital gains tax liability for those already on high rates.

Do you have different incomes?

These days most families have two income earners and many are deciding to “hedge their bets” by owning the property in equal shares.

Most friends that buy properties together are in different financial situations and own the property together to capitalise on each of their strengths. For example, one may have a sizeable deposit while the other may have a strong enough income to afford the repayments.

During the period of ownership half the rental losses go to each of the owners and when the property is sold the capital gain is also split.

Although the year on year tax saving is slightly reduced, the overall tax over time is generally less than if only one person held the property. This reduces the overall tax risk of owning the property.

Beware of possible complications!

Owning joint property can cause its own complications though. Normally the loan, income and expenses of the investors are all split 50/50 for tax purposes, notwithstanding who actually paid for it.

If the investment property is co-owned with someone other than your spouse then there can be disagreements about when to sell as each party may have different tax profiles at the time.

Before buying an investment property make sure that you all have clearly defined investment goals that align with each other. Also decide what you’ll do if one person wants to sell and the other does not.

It is common for friends who buy real estate together to have a disagreement when one needs the equity for something else and the other is forced to buy them out or sell the property as a result.

Having a clear exit strategy up front prevents these disagreements from causing a breakdown in your friendship.

How do the banks assess joint mortgages?

If you buy an investment property with another person then the banks will assess your investment home loan slightly differently:

  • One person having a high income will make up for the other not being able to afford their share of the repayments.
  • One person having a good credit history will not compensate for the other having poor credit, unless their income is not required to prove that you can afford the debt.
  • Credit scoring will normally be slightly more favourable than for a single applicant.
  • The asset position of each borrower is assessed differently depending on the lender you apply with.

Aside from the points listed above, you’ll be need to provide the standard documentation as if you were applying for a mortgage to buy an investment property on your own.

Buying your next property on your own

If you and a friend own an investment property worth $500,000 with a loan of $400,000 on it, then how will the banks assess your situation if you then decide to buy another property on your own?

If the repayments for the loan with your friend were $3,000 / months and the rent income was $2,000 / month then surely the bank would use half of these figures in their assessment for your new loan?

Unfortunately this is not the case.

Banks assume the worst, and so will assess your loan as if you’re making the full $3,000 / month in repayments, however they will only accept half of the rent income!

Thankfully not all banks have this policy! Two of our lenders can consider your actual share of the repayments and rent and as a result will assess your new home loan less conservatively.

Please call us on 1300 889 743 or complete our free assessment form and one of our mortgage brokers will call you to see if you qualify under this policy.

Speak to an accountant

This information is general and has been provided by Lucentor Pty Ltd who are accountants that specialise in tax for property investors.

We recommend investors obtain financial advice specific to their situation before making any investment or decision regarding their finances.

  • Chelsea

    My husband has been in debt due to his business losses and his credit scores aren’t good. We’re trying to refinance the existing mortgage which is jointly owned; can I apply it as sole ownership?

  • Hi Chelsea,

    It is possible to refinance the full loan just under your name if the lender determines you can afford the loan by yourself. However, the lenders would still want to see your conduct on your existing home loan for a minimum of six months.

  • annabelle786

    I have had a few defaults recorded in my credit file in recent years but my partner has a perfect credit history so will that get us through?

  • Hello annabelle,

    One person having a good credit history will not compensate for the other having poor credit, unless their income is not required to prove that you can afford the debt. So you may be in trouble, however, banks can be a bit flexible if the defaults are all paid off and were no more than $1,000 in non-financial institution debts.

  • Curran

    Can your mortgage brokers help me plan out the cashflow of the investment property so I can be sure if it’s negatively geared?

  • Hey Curran,

    You can have a crack at using our investment property cashflow calculator to accurately predict the weekly cashflow position of your next investment property which can help you find out if your property will be positively or negatively geared. The instructions are on the page itself and you can enquire online directly through there if you’d like more help. Here’s the link to the calculator:

  • DaRobba

    Hi. My wife and I are looking to buy an investment property. I am currently the only income earner (salary). We would like to know whether the property ownership should be split more to me and less to her to have maximum tax benefits i.e. 90/10 split to me . We have two dependents as well if that makes any difference. Please advise.

  • Hi
    Yes this is definitely an option and some people do this or would just go 100% in your name for simplicity’s sake.
    Keep in mind that at the moment rates are very low and so in many cases there are few negative gearing benefits. By the time rates go back up it’s possible that the rent will be higher and or your wife may return to work as well. So overall the benefit may be less than you are expecting.
    We can’t give tax advice so it’s best that you talk to an accountant about this before investing.
    You might find this calculator useful, it estimates costs such as council rates and can work out accurately what your likely cashflow would be
    If you’d like our help with an investment loan then please contact us
    There’s big differences in the pricing offered by different banks so it’s likely we’ll get you a great deal.

  • DaRobba

    Thank you!

  • Erron

    My partner and I will be owning the property jointly but we’re not sure if we should buy using cash or get a mortgage. Can you give some insight on either alternatives?

  • Hey Erron,

    Buying an investment property with cash obviously sounds more logical than a mortgage, considering the complications that can arise when you’re in debt. However, it may be difficult to sustain a living if you don’t have funds put aside beforehand. We have a page that has info on buying with cash or with mortgage so please check it out:

  • Christopher Michio Baker

    From Victoria and wondering with the fhog for regional changes to 20,000 after July 2017 does this work if we buy exisiting land in the applicable regional area and build a new property on the land? Example 60k land 140k dwelling = 200k total, what type of deposit would we need on top of the fhog of 20,000 for this?

  • Hi Christopher
    Yes that is correct you’d get the $20k FHOG. The problem that you’ll have is that you need to have funds to settle the purchase of the land. The FHOG comes through when construction starts. Estimate $60k land you’d need $7k – $13k to make it work.
    I’d strongly recommend a guarantor loan if your family own a property already
    Note that we don’t do loans under $300,000 however a local mortgage broker should be able to assist you with this. Best of luck with your purchase.