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 don’t consider is the 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.

  • Kerry

    hi my partner and i are looking to buy a home .. my partner currently outright owns a house with his mum and brother can we use this property to get a no deposit home loan and my partner currently has default on his credit for telstra for 600 … we have no debts, loans or credit cards or dependants .. both working full time…

  • Hi Kerry,
    Defaults with telstra, vodephone or optus are a problem for banks but they tend to be understanding because almost everyone has a dispute with their phone company at one time or another
    Likely we can set this up as a guarantor loan where your partner’s mum and brother are guarantors using the property they own jointly and then you and your partner can buy a home with no deposit. This is something we can arrange quite easily and at good rates, although it is not acceptable with every bank.

  • Paulinho

    I had bought a property in my name 3 years ago. I got married recently and want to add my wife in the property title. Do I have to add her in the mortgage too?

  • Yes Paulinho, if you add her in the title then she is also required to be on the mortgage. That is due to the reason lenders want all the people on the home loan who are in the title of the property. They want to make sure all the owners of the property were involved in the home loan in case of any defaults on the loan.

  • disqus_Sp08eZjolc

    In our current property (PPR) I own the property (only name on the title) but the mortgage is in joint names with my partner and is fixed for another 2 years. If we split up and I rent the property out can I claim 100% of the income and expenses until I am in a position to get him off the mortgage?

  • Hi
    I believe yes as you are the sole owner then you can claim the interest deduction and you receive the rent. As we are not able to give advice in this area I would recommend that you seek formal advice from your accountant and your solicitor as well, just to be sure.
    FYI the cost of the ‘break fee’ on a fixed rate loan tends to be the same or similar to the difference between the current variable rate and the current fixed rate over the next two years. e.g. 0.2% difference in rate and $300,000 fixed for 2 years = approx $1,200 break fee. So it’s either you pay it in one lump sum or over the term, but either way you pay it. So for simplicity’s sake you may want to consider this option:
    – Call your lender and ask for a break fee quote
    – Refinance with an owner occupied loan (as you are living there) & remove your ex. Current special offers are around 3.59% for owner occupied P&I repayments.
    – You can decide to move out if you like. You’ll still receive the lower owner occupied rate
    Many people prefer to remove their ex from their life earlier rather than later. It just depends on how you feel and what’s important to you.
    Some further reading that may be helpful:

  • disqus_Sp08eZjolc

    Thank you – Putting him on there was a financial necessity rather than choice so I need to be in a financial position to get him off the mortgage first :-) and that is what I am working to. I believe I would be better off renting it out renting myself but will need to do the sums. Thank you for your assistance

  • No problem. If you like Gina in our office is a specialist in investment loans. You can give her a call on 1300889743 and she can run the numbers for you. Or you can use the calculator here

  • Daniel Blewitt


    My father and i purchased a home for 670k my loan amount is 150k and fathers loan is 440k. My father and mother live in the dwelling, however my portion of the loan is an investment loan. They pay me $50 a week in rent. In relation to tax and depreciation. How do i go about it claiming? Do they have sign a rental agreement so i can show the ATO.


  • Hi Daniel,
    You’d need to refer this to your accountant as we aren’t experts in tax.

  • Cameron Redmond

    Hi, can my partner and her mother go 50/50 in a house loan. My partner and I would live in it, pay the mortgage, rates, the lot. Her mum will just be on the title instead of me due to my credit history. Whenever we sell the house we will give her a percentage of the profits. Is this doable? Cheers in advance

  • Hi Cameron,
    Yes this is possible. It would be important that you all agree up front how it works and draw up a legal agreement with a solicitor. Otherwise it may cause friction in the family later on.

  • Cameron Redmond

    Yes that will be done. She just wants to see us have a house with our daughter, unfortunately I had a default from a silly pay day loan and a phone bill which I’ve paid but was a year and a half ago which is impacting my ability to be serviced. So her mum said what if she and my partner do it, we live in it and pay all the mortgage as if I was just on the tittle, once we sell we give her a percentage for her contribution / risk she’s taken. Would that be considered just a normal mortgage or would it have to be done a certain way. Thanks for your help and quick response !

  • Hi Cameron,
    There’s a variety of ways that you can do this:
    – Mum owns part of the property (as you suggested)
    – Guarantor loan (difficult with a default)
    – Mum borrows on her property and lends to you as a deposit (easiest option, can work with bad credit).
    It’s best we assess it in full and then work out the best way forward. I’ll email you and cc one of our specialists in this area of lending who can assist you further.

  • Cameron Redmond

    We save 550 a week, so getting the deposits is easy we have enough for land already and that’s in May when it goes on pre sale through a local real estate. We will do all the saving the costs the payments, we don’t want her mother to use any of her own money or put herself in debt, if we can just do the part ownership for her to get it done that’s all we want and more importantly she wants it for us and is comfortable doing this. She even doesn’t want any money when we sell but if we have to see a solicitor we will to make it work.

  • We have some lenders that can accept an impaired credit history if you have a deposit. Anyway I’ve emailed you with one of our broker’s details who can assist further.