Buying Property With Friends in Australia: Co-ownership, Loans and Tax in 2026

Pooling deposits and incomes can make a property purchase possible sooner, especially when one income no longer supports the price and loan required in many Australian markets. Yet buying with a friend or sibling creates a financial partnership that may last longer than jobs, relationships and plans.

The Australian Bureau of Statistics recorded $103.0 billion of new dwelling loan commitments in the March quarter of 2026. The average value represented by those commitments was materially higher than several years earlier, which helps explain interest in co-buying. The structure can improve purchasing power, but it also concentrates credit, tax and relationship risk.

This guide covers owner-occupied and investment co-purchases. Rules differ between jurisdictions and circumstances, so obtain Australian legal, tax and credit advice before signing.

Start with the title structure

The transfer and land title identify the legal owners. The two common forms are joint tenancy and tenancy in common.

Joint tenants

Joint tenants hold the property together rather than in separately stated percentages. The defining feature is usually the right of survivorship: when one owner dies, the surviving joint tenant or tenants automatically receive the deceased interest. It generally does not pass under the deceased person’s will.

This can suit spouses who intend the survivor to own the home. It may be unsuitable for friends with separate families and estate plans.

Tenants in common

Tenants in common hold defined interests. Shares may be equal or unequal: 50/50, 60/40 or another documented split. Each interest can generally pass under its owner’s will, subject to mortgages and other interests.

Unequal shares can reflect different deposits, but the percentage should also align with the intended economic ownership. A $120,000 deposit from one buyer and $40,000 from another does not automatically determine a 75/25 split if repayments and expenses will be shared differently.

Calculate the purchase honestly

Assume two friends buy an $900,000 home. Buyer A contributes $120,000 and Buyer B contributes $60,000. They borrow $720,000 and split repayments equally.

The illustrative shares treat the deposit plus each person’s half of the initial loan principal as their capital exposure: $480,000 for A and $420,000 for B. Other arrangements are possible. What matters is documenting whether the larger deposit is equity, a loan between owners or a contribution to be returned first on sale.

Include acquisition costs

The purchase price is not the complete cash requirement. Budget for transfer duty, conveyancing, searches, inspections, loan fees, registration, moving costs and an emergency reserve. State duty can be tens of thousands of dollars, although eligible first-home buyers may receive concessions.

Do not rely on an online calculator without confirming the settlement date, property type, value, residency and first-home status with the relevant revenue office.

Understand the mortgage relationship

Most co-borrowers are jointly and severally liable. If a $720,000 loan falls into arrears, the bank does not have to accept that each friend owes only $360,000. It can generally seek the contractual payment from either borrower.

Repayment sensitivity

For a $720,000 principal-and-interest loan over 30 years:

At 7.25%, each pays about $355 more per month than at 5.75%. Rates, insurance, council charges, utilities, repairs and strata must all be stress-tested.

Borrowing capacity remains linked after purchase

Even if the private agreement assigns half the debt to each owner, another lender may assess each for some or all of the joint liability when they later seek credit. This can restrict a future car loan, investment purchase or home purchase with a partner.

Loan splits can improve record keeping

Separate loan splits may help owners track contributions, especially where shares are unequal. They do not necessarily sever joint liability. Redraws require care: if borrowed funds are later used privately, the tax character of interest on an investment property can become mixed.

The co-ownership agreement is essential

The title says who owns the property; it rarely answers how two people must live, pay or leave. A tailored deed or agreement should be prepared before unconditional exchange.

Contributions and running costs

Record deposits, purchase costs, mortgage payments, rates, insurance, strata, maintenance and improvements. Decide whether costs follow ownership percentages, bedroom use or equal shares.

Define what counts as an improvement. A $35,000 kitchen may increase value but not by $35,000. The agreement should say whether an owner receives the cost back, a proportion of added value or nothing extra on sale.

Occupancy

Specify who may live there, whether partners can move in, how bills change, whether rooms can be rented and whether pets are allowed. If one owner moves out, decide whether that person can rent their room and whether the remaining owner pays occupation rent.

Decisions

List decisions requiring unanimity, including refinancing, fixed rates, large renovations, leases and sale. Set a lower dollar threshold for routine repairs. Include emergency authority for urgent work.

Default

Define missed payment notice periods, temporary hardship, use of reserve funds, interest on amounts covered by the other owner and a final default mechanism. A six-month joint emergency reserve may prevent a short-term income loss from becoming a forced sale.

Exit and valuation

Every agreement needs an exit process even when nobody plans to leave. Common stages are notice, independent valuation, first right for the remaining owner to buy, finance deadline, open-market sale, and a distribution waterfall.

For example:

1. An owner gives 60 days’ written notice.
2. A jointly appointed certified practising valuer determines market value.
3. The other owner has 30 days to accept a buyout.
4. Finance approval is required within a further 30 days.
5. If settlement cannot occur, the property is listed with an agreed agent.
6. Sale costs and mortgage are paid, documented owner loans are repaid, and equity is split by the agreed formula.

Tax treatment of a shared home

Main residence exemption

An individual may disregard some or all capital gain on a dwelling that qualifies as their main residence under Australian tax law. Each ownership interest is considered in its holder’s circumstances. If one co-owner lives there and another rents out their room or moves elsewhere, their CGT outcomes can diverge.

The six-year absence rule is not a blanket exemption. It has conditions, and a person generally cannot treat two properties as their main residence for the same period beyond limited overlap rules.

Keep the purchase contract, settlement statement, duty, legal fees, improvement invoices, ownership records and valuations. These may be needed years later to establish the CGT cost base.

Renting a room

Rent received is generally assessable. A reasonable share of interest, council rates, insurance and other eligible costs may be deductible, but renting part of a home can reduce the main-residence CGT exemption. The ATO considers the portion and period used to produce income.

Investment property

For ordinary co-owned rental property, the ATO generally allocates income and expenses according to legal interests. If title is 60/40, the tax reporting is usually 60/40, even if the owners privately deposit rent into a different ratio.

Interest follows the use of borrowed money, not merely the property used as security. Borrowing against a rental property to pay for a private holiday does not ordinarily make the holiday debt interest deductible.

Duty, land tax and a buyout

State and territory transfer duty generally applies to acquisitions of property interests, including many buyouts. A $450,000 acquisition of a half-share in a $900,000 property can trigger duty even though no external buyer is involved. Exemptions for relationship breakdowns or deceased estates are specific and should not be assumed.

Land tax rules also vary. Thresholds, aggregation, principal-place-of-residence exemptions, trust surcharges and foreign-owner surcharges are jurisdiction-specific. Co-ownership may affect how interests are assessed.

Before agreeing on a buyout price, model:

First-home buyer rules need early checking

Co-buying can interact awkwardly with the Home Guarantee Scheme, First Home Owner Grant and state duty relief. Programs apply ownership history, residence, income, property-value and participant tests. One ineligible co-buyer may affect everyone.

Check before signing because a concession cannot always be reconstructed after settlement. Use current Housing Australia guidance and the relevant state or territory revenue office.

Insurance and estate planning

Building insurance protects the asset but not the repayment plan. Consider life, total and permanent disability, trauma and income-protection needs. If one owner dies, can the survivor service and refinance the loan? If tenants in common, can the deceased’s beneficiaries require a sale?

Wills, enduring powers and super death-benefit nominations should be reviewed alongside the property agreement. Life cover may provide liquidity for a buyout, but ownership and beneficiary arrangements need professional advice.

Due diligence before exchanging contracts

Financial disclosure

Each buyer should disclose income, employment status, debts, credit limits, dependants and expected changes. Obtain loan pre-approval but remember it remains conditional on the property, valuation and unchanged circumstances.

Property checks

Order building and pest reports where appropriate, review strata records for apartments, inspect title and easements, and understand flood, bushfire and insurance risk. Co-buying does not make a poor asset better.

Professional advice

Use an appropriately licensed mortgage broker or lender, a solicitor or conveyancer familiar with co-ownership, and an accountant or registered tax adviser. Friends should consider separate legal advice where interests differ.

A practical co-buyer checklist

• Agree on budget, suburb, dwelling and holding period.
• Choose joint tenants or tenants in common deliberately.
• Decide whether unequal deposits create unequal equity or an owner loan.
• Get a written co-ownership agreement before becoming unconditional.
• Model repayments at least two percentage points higher.
• Maintain a joint expenses account and emergency reserve.
• Prohibit unapproved redraws and additional security.
• Set annual insurance, will, loan and exit reviews.
• Keep receipts and a ledger of every capital contribution.
• Obtain tax advice before renting, moving out or transferring a share.

The bottom line

Buying with friends can turn two partial deposits and incomes into a viable purchase. The price is interdependence: each person’s credit, cash flow, relationships, estate and future borrowing become connected.

Treat the arrangement like a business partnership. Put the uncomfortable scenarios in writing while the relationship is strong, use conservative numbers and make exit possible without a courtroom.

To compare joint loan structures, find an Australian mortgage broker on WealthWorks. For ownership, rental and CGT records, find an accountant on WealthWorks.