When more than one buyer is involved, choosing between Joint Tenants and Tenants in Common is an important part of the home buying process.
Ideally, buyers should choose a tenancy when completing the Offer and Acceptance, rather than waiting until the settlement process begins.
However, even if a tenancy is not specified in the Offer and Acceptance, it’s important to be aware of your options – your choice will have implications for survivorship and how the property can be sold in future.
There are also tax implications for some buyers.
Earlier this year, two clients of ours bought property together, and nominated to be Joint Tenants. Some time after settlement, they met with their accountant, who advised them that they should have bought as Tenants in Common with 70-30 shares in the property. As Joint Tenants, the property was costing them thousands of extra dollars in tax.
Changing the tenancy to Tenants in Common with unequal shares will prove costly, as stamp duty will be payable.
To help ensure that you don’t regret your choice of tenancy, be aware of the choices when it comes to Joint Tenants and Tenants in Common. Depending on your situation, you may benefit from speaking to your accountant before making a decision.
Image by Benjamin Linh VU via Flickr.