Joint Tenants v Tenants in Common
When purchasing an investment property with a spouse or investment partner you have a choice between “Joint Tenants” and “Tenants in Common”.
Joint Tenants
- Joint Tenants own the property jointly without any specific specification of ownership % on the title deed.
- When preparing your income tax return, you would include 50% (if two owners) or 33% (if 3 owners) of the net rental income in your return.
- On death of one owner the interest held by the property immediately passes to the remaining investor.
Tenants in Common
- Tenants in Common still own the property jointly but there is a specification of ownership % on the title deed. This may be as simple as 50/50 or depending on your situation may be 99% to one spouse & 1% to the other spouse.
- In your tax return, you would include your specific % ownership e.g. 99% of the net rental income in your return.
- Tenants in common is a good way to manage parties coming together with different capacities to contribute to the investment.
- On death of one owner, the interest held by the deceased will pass to their estate or to the beneficiary they have nominated in their Will. You may end up being a joint owner of a property with a person you never intended.
Each option is suitable for different situations and types of joint owners so ensure you seek advice from a lawyer about the most appropriate way for you to structure the purchase. Purchasing an investment property or new home is also a great time to make sure your estate planning is up to date.
Not sure how to check the ownership? Call us on 07 3849 3816 or email admin@goadaccountants.com.au and we can put you in touch with one of our recommended property lawyers.
Karen Goad is Principal of Goad Accountants and Simply Business Bookkeeping. Karen is a Chartered Accountant and Certified Tax Adviser with over 17 years of experience advising small and medium business and helping them get the most out of their business through accurate record keeping, tax advice, KPI monitoring and profit improvement strategies. Goad Accounts also specialises in tax for property investors and self-managed super fund administration.
