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Buying property: a simple guide to ownership options

Updated: May 19, 2022

From joint ownership of property, tenants in common, family trust, and more - here's our guide to understanding popular ownership structures

When buying property in Australia there are various ownership options to consider. To determine which option is suitable for you and your financial circumstances, it’s recommended you consult a licensed professional. These experts can help you to determine the most suitable decision.

It’s important to fully understand the various forms of ownership options. When doing so you should look at what they are, their benefits and potential downfalls, risks, and long-term gains. Below is a rough guide for the most common ownership options in Australia.

Tenants in common

Tenants in common is an ownership option used to explain two or more people who co-own real estate in shares. This split can occur evenly and unevenly. For instance, an uneven split could be when one person owns an 80% share and the other owns 20%.

With tenants in common, there’s no right to survivorship. This means that if one person dies, the shares don’t change. Instead, the shares of the deceased can be passed to their heirs or whomever is listed in their will.

This strategy is common for people who are remarrying (and have older children to a prior marriage), investors buying property together, and people who want to contribute different amounts when buying property.

Joint tenancy

Joint tenancy is a structure where two or more people hold joint ownership of property. While all parties are alive, they each own equal rights to the property.

With this ownership option there’s a right to survivorship. In the instance of a death of one party, their rights of ownership get passed to the surviving owners. This strategy is common for married or long-term couples.

With a joint ownership of property structure, all parties own equal rights to the property
With a joint ownership of property structure, all parties own equal rights to the property

A joint ownership of property agreement can end under these circumstances:

  • The property is sold to another party

  • When one join tenant transfers their interest to the other party(ies)

  • When one of the tenants severs the joint tenancy (to protect their interest in a relationship breakdown).

Tenants by the entirety

Tenants by the entirety is an ownership structure established for married couples, only. When buying property, these two individuals own equal shares of the property. If they own an investment property under this structure – they own equal shares of any income produced from it.

Considerations of tenants by the entirety:

  • This structure offers the rights of survivorship. In which, if one party dies, the title is transferred to the surviving spouse

  • When selling the property, both parties must agree to sell

  • In the instance of divorce, the owners automatically become tenants in common.

Sole ownership

This is one of the most common real estate ownership options in Australia. Sole ownership occurs when the property asset belongs to an individual person who’s legally capable of holding the title.

The major advantage of owning a home or investment property with this structure is that decisions and transactions can be conducted with ease. That’s because no other party needs to be consulted to authorise them.

The biggest drawback of this structure is the potential for problems to occur if the owner dies. Unless there’s legal documentation in place prior to them passing, transferring the ownership title can become problematic.

Family trust

Owning property through a family trust structure is popular for owners of an investment property. A family trust can be set up to hold a family’s personal or business assets. When you use this structure to buy an investment property, you aren’t legally the property’s owner. Instead, you’re a beneficial owner. The trustee will own the property on your behalf.

Investors can set up this ownership structure for the following purposes:

  • Estate planning purposes

  • Tax planning

  • Asset protection.

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