Purchasing Property – Joint Ownership
If you are considering purchasing property with one or more others, it is important to think about what portion of the property you will own and the tenancy pursuant to which you will hold your interest in the property.
In Queensland, there are two types of joint ownership:
- Joint tenancy; and
- Tenants in common.
The effect of tenancy
The effect of joint tenancy ownership is that if one owner of the property dies, their share in the property will pass to the surviving joint tenants. Joint tenancy ownership will also mean the owners hold the property in equal shares.
Alternatively, if you decide to purchase and hold the property as tenants in common and one owner of the property dies, their share in the property will pass in accordance with their will or the laws of intestacy (if they do not have a will).
What tenancy you decide on can have lasting consequences. For example:
- Succession Planning – As noted above, how you own the property effects what will happen to your interest in the property upon your death. If you are wanting to have your share in the property distributed in accordance with your will, a joint tenancy will not be appropriate.
- Duty – As Transfer Duty and Additional Foreign Acquirer Duty is calculated in relation to the interest each buyer is acquiring in the Property, you might wish to purchase property in unequal shares to reduce one buyer’s duty liability.
- Foreign Investment Review Board – If you are a foreign acquirer purchasing property as joint tenants with your spouse who is an Australian Citizen, Australian permanent resident or New Zealand Citizen, you may be exempt from requiring foreign investment approval before purchasing property in Australia.
Other matters such as asset protection and taxation implications can also impact how you decide to hold property jointly, and you should always seek appropriate legal and financial advice.
What if you change your mind?
Sometimes, you might purchase property and later wish to change how you are holding the property. Generally, any change to the proportion of the property you own will result in additional Transfer Duty becoming payable.
If your circumstances change and you no longer wish to hold property as joint tenants, you will need to sever the joint tenancy by lodging the necessary forms with the Registrar of Titles.
The information in this article is general information only. For more information and advice, please contact Miller Sockhill Lawyers on 07 5444 4750 to speak to a member of our experienced Property Law Team.