In short: Joint tenants own the whole property together in equal, undivided shares, and when one dies their interest passes automatically to the survivor. Tenants in common own defined shares, equal or unequal, that each owner can sell, mortgage or leave under a will. In Victoria, co-owners are registered as joint proprietors unless the transfer specifies shares. Your home loan liability is the same either way.
The choice between joint tenancy and tenancy in common is made on the transfer of land lodged at settlement, and most buyers give it about ten seconds of thought. It deserves more, because it decides who owns the property when one of you dies, how a break-up is resolved, and how capital gains and land tax are shared.
What the law says
Under the Transfer of Land Act 1958 (Vic), two or more people who become registered proprietors of land together are recorded either as joint proprietors (joint tenants) or as tenants in common in specified shares. If the transfer is silent, they are taken to be joint proprietors. The Property Law Act 1958 (Vic) supplies the underlying rules of co-ownership, and Part IV of that Act gives VCAT power to resolve disputes between co-owners, including ordering a sale or physical division of the land.
Joint tenants
- Each owner holds the whole property jointly; there are no separate shares.
- The right of survivorship applies: on the death of one joint tenant, the property vests in the surviving joint tenant(s) automatically, outside the will and outside probate.
- A joint tenant cannot leave their interest by will while the joint tenancy exists.
- A joint tenancy can be severed by one owner without the other's consent, usually by registering a transfer of their interest to themselves as a tenant in common. Once severed, the owners hold as tenants in common in equal shares.
Tenants in common
- Each owner holds a distinct share, such as 50/50, 70/30 or 90/10, recorded on the title.
- There is no survivorship. Each share passes under the owner's will or under intestacy rules.
- Each owner can sell, gift or mortgage their share, though in practice a lender will want a mortgage over the whole title.
- Shares can be unequal to reflect unequal contributions.
Comparison
| Feature | Joint tenants | Tenants in common |
|---|---|---|
| Ownership shares | Equal and undivided | Any proportions, recorded on title |
| On death | Passes to survivor automatically | Passes under the will or intestacy |
| Can be left in a will | No | Yes |
| Can be changed later | Yes, by severance | Yes, by transfer of shares |
| Typical use | Married and de facto couples | Friends, siblings, blended families, investors |
| Home loan liability | Joint and several | Joint and several |
| CGT and land tax | Split equally | Split according to shares |
How to choose, step by step
- Decide who should inherit. If you want the property to pass to your co-owner on your death without a will or probate, joint tenancy does that. If you want your share to go to children from a previous relationship, a parent or anyone else, choose tenancy in common and make a will.
- Decide whether contributions are unequal. If one person is paying a larger deposit or more of the repayments, tenancy in common in matching shares records that on the title.
- Consider tax. Rental income, deductions and capital gains follow ownership shares. For an investment property, a higher-income partner holding a larger share may claim more deductions but will also pay more CGT on sale. Our negative gearing guide explains the trade-off.
- Consider land tax. Co-owners are assessed jointly on the land under the Land Tax Act 2005 (Vic), and each owner's share is also counted in their individual assessment. See land tax in Victoria explained.
- Write a co-ownership agreement if you are not a couple. It should deal with outgoings, repairs, exit rights and how the property is valued if one owner wants out. Our page on buying property with a partner covers what to include.
- Tell your conveyancer before settlement. The choice is recorded on the transfer during conveyancing. Changing it afterwards means another registration, and possibly duty.
Worked example
Two friends buy a $500,000 house in Kalkallo as an investment. One contributes $80,000 of the deposit and costs, the other $40,000, and they split the loan repayments 60/40. They register as tenants in common in shares of 60% and 40%.
Five years later the property sells for $640,000. After selling costs, the capital gain is $110,000. It is split $66,000 and $44,000 according to their shares before the CGT discount is applied. If one of them had died in year three, their 60% share would have passed to their family under their will, not to the co-owner.
Had they registered as joint tenants, the title would have shown equal ownership regardless of who paid what, the survivor would have taken the whole property on the other's death, and the ATO would generally treat the gain as split 50/50. Our capital gains tax calculator shows the difference.
Changing the arrangement later
- Severing a joint tenancy. Either owner can do this unilaterally by registering a transfer to themselves at Land Use Victoria. It is commonly done during a separation so that a share doesn't pass to an estranged partner by survivorship. No money changes hands and there is generally no duty because the beneficial interest doesn't change.
- Transferring shares between spouses or domestic partners. Under the Duties Act 2000 (Vic), a transfer of your principal place of residence between spouses or domestic partners is exempt from land transfer duty. Transfers of an investment property between spouses are generally dutiable unless they result from a relationship breakdown under a court order or binding agreement.
- Transferring shares between other co-owners. Duty is payable on the value of the share transferred at the general rates. On a $200,000 half share, that is $2,870 plus 6% of $70,000, or $7,070. CGT may also apply to the transferor.
- Disputes. Where co-owners cannot agree on selling, Part IV of the Property Law Act lets VCAT order a sale and decide how the proceeds are divided, taking into account contributions.
What it means for your home loan
Lenders are indifferent to how you hold the title but not to who is on the loan:
- Joint and several liability. Every borrower is liable for the full loan, whatever the ownership split. A 10% owner who is a co-borrower can be pursued for 100% of the debt.
- All owners usually go on the loan. Lenders generally require every registered proprietor to be a borrower or, at minimum, to sign the mortgage.
- Unequal shares don't reduce serviceability tests. Each borrower is assessed as able to service the whole loan, with the APRA buffer of 3 percentage points applied.
- Buying someone out. Refinancing one owner off the title means the remaining owner must qualify for the full loan alone. Our equity calculator helps you see how much can be released.
- Estate planning and lenders. On the death of a joint tenant, the survivor takes the property but remains liable for the loan. Consider mortgage protection insurance.
Gorakh Timilsina's background as a senior credit officer means GNT Finance structures loans with the title arrangement in mind from the start, particularly for family and friend co-purchases common in Melbourne's north. Our home-loan service is at no cost to you in most cases.
Common mistakes
- Defaulting to joint tenancy for a purchase with a friend or sibling, then discovering survivorship overrides the will.
- Recording equal shares when contributions are very unequal, with no written agreement to reconcile the difference.
- Not making a will as tenants in common, so a share passes under intestacy rules.
- Forgetting the loan is joint. A co-owner who stops paying leaves the other legally responsible for everything.
- Transferring shares without checking duty and CGT. A "simple" transfer to a spouse of an investment property can cost tens of thousands.
Frequently asked questions
What is the difference between joint tenants and tenants in common?
Joint tenants own the whole property together equally and the survivor inherits automatically when one dies. Tenants in common own separate shares, which can be unequal, and each share passes under the owner's will. Couples usually choose joint tenancy; friends, siblings and investors usually choose tenancy in common. Both are recorded on the transfer at settlement.
Can I sever a joint tenancy without my partner's consent in Victoria?
Yes. A joint tenant can sever the joint tenancy unilaterally by registering a transfer of their interest to themselves at Land Use Victoria, converting the ownership to tenants in common in equal shares. It is often done during separation. The other owner is notified through the registration process. Get legal advice first, because the timing can affect family law property settlements.
Do tenants in common have to pay stamp duty when transferring shares?
Usually yes. Transferring a share to another co-owner is a dutiable transaction under the Duties Act 2000 (Vic), assessed on the value of the share. The main exception is a transfer of your principal place of residence between spouses or domestic partners, which is exempt. Transfers arising from a relationship breakdown under a court order or binding financial agreement are also generally exempt.
Who pays the mortgage if one tenant in common dies?
The loan continues. If the deceased was a borrower, their estate is liable along with the surviving co-borrower, who remains liable for the whole loan regardless of ownership share. The deceased's share of the property passes under their will, and the beneficiary takes it subject to the mortgage. Life or mortgage protection insurance can cover this scenario.
Is tenants in common better for an investment property?
Often, because it lets you set ownership shares to match contributions and to plan for tax, and it keeps each owner's share within their own estate. It also makes it easier for one owner to be bought out. The downside is that there is no survivorship, so a will is essential. Speak to an accountant about the CGT and land tax effects of your chosen split.
Talk to GNT Finance
Whether you're buying with a partner, a sibling or a friend, GNT Finance can structure the loan so it matches how you'll hold the title and what happens if one of you wants out. Book a free consultation or call 0426 403 703.
This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.