Buying Property with a Partner in Australia: Legal, Financial, and Tax Guide

Buying property with another person — whether a spouse, de facto partner, friend, or family member — is one of the most common ways Australians get into the property market. Pooling resources can make homeownership more achievable, but it also introduces legal, financial, and relationship complexities that many buyers overlook until something goes wrong.

Before you sign anything, it is essential to understand the different ownership structures available, how the mortgage works, what happens if the relationship breaks down, and how to protect both parties from the outset.

Joint Tenants vs Tenants in Common

When two or more people buy property together in Australia, the title can be held in one of two ways. This choice has significant legal and financial implications, particularly around inheritance and what happens if one owner dies.

Joint Tenancy

Under joint tenancy, all owners hold an equal share of the property and have the right of survivorship. This means:

• Each owner has an equal, undivided interest in the property (e.g., 50/50 for two owners)
• If one owner dies, their share automatically passes to the surviving owner(s) — regardless of what their will says
• The property cannot be left to someone else in a will while the joint tenancy exists
• Any owner can sever the joint tenancy unilaterally (converting it to tenants in common) by filing a notice with the land titles office

Joint tenancy is the most common choice for married couples and long-term partners because of the automatic survivorship — it provides simplicity and security if one partner passes away.

Tenants in Common

Under tenancy in common, each owner holds a specified share of the property, which can be equal or unequal. Key differences from joint tenancy:

• Shares can be unequal (e.g., 70/30 or 60/40), reflecting different financial contributions
• There is no right of survivorship — each owner's share forms part of their estate and passes according to their will
• Each owner can independently sell, mortgage, or transfer their share (though practically this is complex)
• Shares can be left to anyone in a will

Tenants in common is the preferred structure when co-owners are making unequal contributions, when they are not in a romantic relationship (e.g., friends or siblings buying together), or when each party wants their share to go to their own beneficiaries rather than the co-owner.

Married vs De Facto vs Friends or Family

The nature of your relationship with your co-buyer affects both the legal framework that applies and the practical risks involved.

Married Couples

Married couples are governed by the Family Law Act 1975 (Cth) if they separate. The family court has wide discretion to divide property based on contributions (financial and non-financial) and future needs, regardless of whose name is on the title or who paid the deposit. The ownership structure (joint tenants or tenants in common) is less important in practice because the family court can override it.

De Facto Couples

De facto couples (including same-sex partners) who have been in a relationship for at least two years (or have a child together, or have made substantial financial contributions) are generally treated similarly to married couples under the Family Law Act in most states. The same property division principles apply. However, proving the existence and duration of a de facto relationship can be more complex and contentious than for married couples.

Friends, Siblings, or Other Family Members

When you buy with someone who is not a spouse or de facto partner, the Family Law Act does not apply. This means:

• The legal title determines ownership — if you are tenants in common 50/50, each person owns 50%
• There is no family court to make "fair" adjustments based on contributions
• Disputes are resolved through state civil courts, which is typically slower and more expensive
• A co-ownership agreement (also called a property agreement) is strongly recommended

How the Mortgage Works

When two or more people take out a mortgage together, the lender typically requires all borrowers to be jointly and severally liable. This is a critical concept that many co-buyers do not fully understand:

• Joint liability means the lender can pursue all borrowers together for the full amount
• Several liability means the lender can also pursue any individual borrower for the entire debt — not just their share
• If your co-buyer stops paying, you are responsible for the full repayment, not just your half
• A default by either borrower affects both credit ratings
• The mortgage will appear on both borrowers' credit files, affecting their capacity to borrow for other purposes

Before committing to a joint mortgage, use the stamp duty calculator to understand the full upfront costs, and make sure both parties can comfortably service the loan independently if needed.

What Happens If You Break Up?

This is the scenario nobody wants to plan for but everyone should. The process depends on your relationship type:

Married or De Facto Couples

If you separate, the family court can make orders about the property, including:

• Ordering the property to be sold and the proceeds divided
• Ordering one party to buy out the other's interest
• Transferring the property entirely to one party (with adjustments elsewhere in the property pool)

The court considers each party's financial and non-financial contributions (including homemaking and child-rearing), the length of the relationship, each party's future needs, and any other relevant factors.

Non-Couple Co-Owners

For friends, siblings, or other non-couple co-owners, if you cannot agree on what to do with the property, the options are more limited:

• Negotiate a buyout or sale between yourselves
• Apply to the state supreme court for an order for partition or sale under the relevant state property legislation
• A court-ordered sale is expensive, slow, and often results in the property selling for less than market value

Protecting Yourself: The Co-Ownership Agreement

Whether you are buying with a partner, friend, or family member, a written co-ownership agreement (sometimes called a cohabitation agreement or property agreement) is one of the most important documents you can have. It should cover:

1. Ownership shares: What percentage each party owns, and how this was determined
2. Financial contributions: How the deposit, stamp duty, legal fees, and ongoing costs (mortgage repayments, rates, insurance, maintenance) will be split
3. Unequal contributions: How to handle situations where one party contributes more than their share — will this be treated as a loan, a gift, or an adjustment to ownership percentages?
4. Decision-making: How decisions about the property will be made (e.g., renovations, renting, refinancing)
5. Exit mechanism: What happens if one party wants to sell their share — does the other have a right of first refusal? How will the property be valued?
6. Dispute resolution: A process for resolving disagreements (e.g., mediation before legal proceedings)
7. Death or incapacity: What happens if one party dies or becomes incapacitated

Have the agreement drafted or reviewed by a solicitor. While it may cost $1,000-$3,000 upfront, it is a fraction of the cost of a property dispute.

Tax Implications of Buying Together

Buying property with another person has several tax implications that you should discuss with an accountant:

• Stamp duty: First home buyer concessions may apply to one or both buyers depending on the state and each person's prior property ownership. If one buyer already owns property, the concession may be reduced or lost entirely.
• Capital gains tax (CGT): If the property is your principal place of residence, CGT generally does not apply. If it is an investment, each owner pays CGT on their share of the gain when the property is sold. Tenants in common with unequal shares split the gain according to their shares.
• Rental income: If the property is rented, each owner declares their share of the income (and claims their share of deductions) on their individual tax return.
• Land tax: Ownership of multiple properties can trigger land tax thresholds. Check your state's land tax rules, as they vary significantly.

For a detailed breakdown of upfront costs including stamp duty for your state, see our stamp duty calculator.

Practical Tips for Buying with a Partner

1. Have the hard conversation early: Discuss finances openly before you start looking at properties. Understand each other's income, debts, savings, and financial goals.
2. Get independent legal advice: Each party should have their own solicitor review the co-ownership agreement to avoid conflicts of interest.
3. Update your wills: Ensure your will reflects the ownership structure. If you are tenants in common, your share goes to your estate — make sure your will is current.
4. Keep records: Document all financial contributions from both parties, including the deposit, stamp duty, renovations, and ongoing payments.
5. Plan for the worst: Agree on an exit strategy before you buy. It is much easier to negotiate when the relationship is good than when it is not.
6. Consider income protection insurance: If one borrower loses their income, it protects both parties from default.

Related Resources

• Stamp Duty Calculator — Calculate your upfront costs including first home buyer concessions
• Home Loan and Finance Guide — Understanding mortgage types and borrowing capacity

This article provides general information only and does not constitute legal or financial advice. Always consult a qualified solicitor and accountant for advice specific to your circumstances.