For many people, their main residence will be their major asset. How that asset is owned can make a significant difference to the property structure for individuals. If two or more people are purchasing a property, they must elect a form of ownership. There are three options:
- Joint tenants;
- Tenants in common in equal shares; or
- Tenants in common in unequal shares.
If multiple owners are joint tenants, then the principle known as the ‘right of survivorship’ will apply. If a joint owner passes away the property is automatically transferred to the surviving owner or owners. This is the most common form of ownership for couples purchasing a main residence.
If multiple owners purchase a property as tenants in common, then upon the passing of one owner, that owner’s share is bequeathed to a person under their Will. There are potential tax minimisation strategies in owning an investment property as tenants in common in unequal shares. If you are considering a property as an investment we recommend speaking to an accountant or financial planner, and a lawyer in relation to your succession planning.
The type of ownership can also have tax implications for dealing with the property, as can changing from one type of ownership to another in some circumstances. Understanding how a property is owned, and the consequences of that type of ownership, is vital to any sound asset structure and succession planning.
If you need assistance with a question about Land Tax in any State or Territory in Australia, contact Ben Hatte, Director of the Property Law team on 02 6188 3600.