Co-Buying Property in Australia: What to Sort Out Before You Buy With Friends or Family
Co-buying property in Australia is rising fast. Learn the legal structures, mortgage risks, tax rules, and agreements you need before you buy with friends or family.
By Timothy Hirou GaschereauPublished 11 min read
Try it yourself
Buying with a friend or a sibling, rather than a partner, is one of the fastest-growing ways Australians are getting into the property market. It's a legitimate strategy, but it comes with legal and financial details that a lot of co-buyers skip past in the excitement of getting pre-approved. This is part of a wider guide to property and debt on Snowball Invest. Note this article is about buying with a friend, sibling, or other non-romantic co-buyer, not a romantic partner.
Quick answer
Co-buying property in Australia is surging, but the two biggest things to sort out before you buy are the ownership structure (almost always tenants in common for friends or family) and a co-ownership agreement drafted by a property lawyer. Every co-borrower is jointly and severally liable for 100% of the mortgage, regardless of their ownership share, and tax is split by legal ownership percentage, not by private agreement. Get the paperwork right and it can work well.
In this guide
- →Why co-buying with friends and family is rising so fast in Australia, and who's eligible for the 5% Deposit Scheme
- →Joint tenancy vs tenants in common, and why one is almost always the right call for co-buyers
- →What a co-ownership agreement needs to cover, and why the title alone isn't enough
- →How lenders actually treat co-borrowers, and the liability risk many people miss
- →What to work out with your co-buyer before you sign anything
- →How the ATO taxes co-owned rental income and capital gains
📈 Why More Australians Are Co-Buying Property
NAB's home lending data for the 12 months to July 2025 shows a 33% increase in joint loans taken out by friends and family buying together, compared with the prior year. Growth was strongest in Victoria (up 47%), South Australia (up 37%) and New South Wales (up 34%).
A 2024 survey found 4% of Australians have already bought with a friend and 5.7% with a sibling, with 56.4% saying they'd consider it. The driver is housing affordability: pooling deposits gets buyers across the threshold faster, and combining incomes improves borrowing capacity.
🎯 The essential: The Australian Government's 5% Deposit Scheme (previously the Home Guarantee Scheme) is now open to eligible friends and siblings buying together as joint applicants, not just couples. Eligible buyers can purchase with a 5% deposit and avoid Lenders Mortgage Insurance. See our guide to how much deposit you need for how the scheme compares with the standard 20% benchmark.
⚖️ The First Big Decision: Joint Tenancy or Tenants in Common?
Joint tenancy. All owners hold the property together as a single, equal interest, shares are always equal. The defining feature is the right of survivorship: if one joint tenant dies, their interest passes automatically to the surviving co-owner or co-owners, not through their will.
Tenants in common. Each owner holds a separate, defined share. Shares can be unequal, for example 70/30 or 60/40, reflecting who actually put in more money. There is no right of survivorship, a deceased owner's share passes through their will or intestacy rules instead.
Joint tenancy
Equal shares only
Right of survivorship. Their share bypasses the will automatically.
Tenants in common
Shares can match real contributions
No survivorship. Owner B's 30% is untouched, unrelated to Owner A's estate.
For friends or family, tenants in common is almost always the right structure. It reflects unequal financial contributions and gives each person estate-planning control over their own share. Get a conveyancer or property lawyer to set this up correctly at the time of purchase, changing it later involves additional legal steps and potentially stamp duty.
📄 The Co-Ownership Agreement: The Document You Cannot Skip
A co-ownership agreement, sometimes called a co-ownership deed, is a private legal contract that sits alongside the title and the mortgage. It's enforceable as a contract, and it's the document that actually deals with the situations the title itself is silent on.
A properly drafted agreement should cover:
- Each party's ownership percentage, matching actual financial contribution.
- How ongoing costs are split and paid: mortgage, rates, water, insurance, maintenance.
- What happens if one party wants to exit: the process, timeline and exit price.
- A right of first refusal for the other owner or owners before selling to a third party.
- What happens if one party can't make repayments.
- A dispute resolution process, mediation before court.
- What happens if a party dies, is incapacitated, or goes bankrupt.
🎯 The essential: Professional preparation starts at roughly $1,245 plus GST (2021 pricing from E&A Lawyers NSW, likely higher now). Don't use an internet template, get a property lawyer to draft it.
🏦 How Lenders Assess a Co-Ownership Mortgage (And the Risk You Need to Understand)
Both borrowers are jointly and severally liable for 100% of the loan, not their ownership percentage. Commbank's co-borrower fact sheet puts it plainly: "Each borrower is jointly and severally liable. This means you are responsible for the total debt and repaying the whole amount, in the event the other borrower(s) can't or won't pay."
A $600,000 mortgage, split 70/30 by ownership
Jointly and severally liable: if one co-borrower stops paying, the lender can pursue the other for the full outstanding balance, regardless of ownership share.
If your co-buyer stops paying, the lender can pursue you for the full outstanding balance. Your private agreement about splitting costs has no effect on the lender's legal right to do this. Commbank again: "In the event of a default in repayments, we will give all borrowers notice to correct the default. If the default is not corrected, your credit rating may be affected."
Both parties' credit files can be affected by a default, even if it's entirely the other person's fault. The co-owned mortgage also counts against future borrowing capacity for either party, worth knowing before you sign if you're planning to buy again later. If things ever go seriously wrong between co-owners, the practical fallout looks a lot like what we cover in joint home loans and separation.
🤝 Choosing the Right Co-Buyer: Practical Considerations
Worth discussing openly before you sign
- ✓Job security, existing debts and attitudes to risk, financial compatibility matters more than friendship
- ✓Whether you're both likely to hold the property for a similar timeframe
- ✓Whether you can actually have difficult conversations with each other about money
- ✓"What if" scenarios: job loss, illness, relationship changes, interstate moves
What tends to go wrong when this is skipped
- ✕One party wants to sell years before the other is ready
- ✕A default or missed payment turns into a credit and relationship problem at the same time
- ✕Disagreements about repairs, renovations or who's using the property
- ✕No agreed process when someone's circumstances genuinely change
A guarantor arrangement is a different structure again, worth understanding as an alternative if a straight co-buy doesn't suit your situation. See our guide to guarantor home loans for how that compares.
🏠 How Much Deposit Do You Need?
Compare deposit paths, including government schemes, side by side before you decide how to structure your purchase.
🧾 Tax Implications for Co-Owners
Under tenants in common, each owner is taxed on their share of rental income and capital gains according to their legal ownership percentage, not a 50/50 split unless that's genuinely their actual share.
Private agreements between co-owners cannot override the legal ownership split for tax purposes, this is set out in Tax Ruling TR 93/32. The ATO does not treat co-ownership of a rental property as a partnership at general law.
The same principle applies to capital gains on sale. If one co-owner lives in the property as their main residence and the other doesn't, CGT treatment becomes more complex, since each person's main residence exemption applies only to their own share. Get advice from a tax professional for your specific situation before you sell.
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❓ Frequently asked questions
Can friends or siblings use the Australian Government's 5% Deposit Scheme to co-buy?
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Yes. The scheme is open to joint applicants including eligible friends and siblings, up to two applicants. The property must be owner-occupied, not an investment. Check current eligibility at firsthomebuyers.gov.au.
What is the difference between joint tenancy and tenants in common for co-buyers?
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Joint tenancy means equal shares and a right of survivorship, so a deceased owner's share passes automatically to the surviving co-owner rather than through their will. Tenants in common allows unequal shares and has no right of survivorship, so each person's share passes via their will or intestacy rules. Tenants in common is almost always the better structure for friends or family buying together.
What happens if my co-buyer stops making mortgage repayments?
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The lender can pursue you for the full outstanding balance. All co-borrowers are jointly and severally liable for 100% of the debt, not just their ownership percentage.
Do we need a co-ownership agreement if we are buying as tenants in common?
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Yes, strongly. The title records ownership percentages, but it says nothing about how costs are split, what happens if one person wants to exit, dispute resolution, or what happens if a party dies, is incapacitated, or goes bankrupt. A co-ownership agreement covers all of that.
How does the ATO tax co-owned rental property?
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Each co-owner declares their share of rental income and expenses based on their legal ownership percentage, under Tax Ruling TR 93/32. A private agreement between co-owners cannot change how the ATO attributes that income for tax purposes.
Can one co-owner sell their share without the other's agreement?
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In principle, yes, under tenants in common. In practice it's difficult, since buyers for a partial interest in a property are hard to find. A well-drafted co-ownership agreement should include a right of first refusal for the remaining owner or owners before a sale to a third party.
This article is general information only. It is not financial, legal, or tax advice. Before buying property with another person, we strongly recommend seeking independent legal, financial, and tax advice.
📚 Recommended reading
The Armchair Guide to Property Investing
Ben Kingsley & Bryce Holdaway
Two of Australia's most trusted property voices lay out a plain-English roadmap to building a portfolio on an average income. Practical, local, and refreshingly free of get-rich-quick hype.
Money School
Lacey Filipich
Lacey Filipich shows how to buy back your time, not just budget your dollars, with a clear path from saving to financial independence. It is refreshingly Australian and genuinely doable, even if maths was never your thing.
Make Money Simple Again
Bryce Holdaway & Ben Kingsley
The Property Couch guys turn cash-flow chaos into one simple money management system you can actually stick to. Perfect if budgeting apps have never quite worked for you.
Some links above are affiliate links. If you buy through them, Snowball Invest may earn a small commission at no extra cost to you. We only recommend books we'd suggest anyway.
Sources
- 1. Co-ownership and right of survivorship, Australian Taxation Office
- 2. Co-ownership of rental property, Australian Taxation Office
- 3. Tax Ruling TR 93/32: Co-ownership of rental property, Australian Taxation Office
- 4. Siblings share keys to first home as co-buying rises, NAB
- 5. Co-borrower fact sheet, Commonwealth Bank
- 6. Australian Government 5% Deposit Scheme, Housing Australia
- 7. Buying a house, Moneysmart, Australian Securities and Investments Commission
- 8. First Home Guarantee information, Housing Australia
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Timothy Hirou Gaschereau
Founder of Snowball Invest, not a financial adviser.
I write about what I'm learning myself, because nobody ever taught us how to take control of our own money. It's a skill, not a mystery, and it's never too late to learn it. The best day to start was yesterday, the second best is today.
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