Co-ownership of Investment Property

Co-ownership of investment property is important as it determines the distribution of income or negative gearing loss and or capital gains. Co-ownership can either be joint tenants or tenants in common and is recorded on title deeds.

Co-owners can enter into private arrangements relating to division of property at any given time, but for income tax purposes, the tax office will only recognise what is recorded on the title deed.

So what is the difference:

Joint Tenants - is where each owner holds an equal interest in the property. Commonly used in co-ownership of the family home.

Tenants in common - is where each owner may hold an unequal interest in the property - for example, one may hold 20% interest and the other an 80% interest. Commonly used with investment properties where one owner (eg spouse) has a higher income than the other. It is common in this situation to alter the ownership structure to utilise negative gearing.

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