How to Buy Property With a Friend or Partner (Without It Ending Badly)

Co-buying can get you into the market years sooner. It can also strain a relationship if the money is fuzzy. The good news: almost every co-ownership dispute is preventable with a few clear decisions made before you sign. Here's the practical sequence.

Step 1: Align on the goal before the property

Co-owners often discover too late that they wanted different things. Get explicit, together, on:

• Time horizon — are we holding for 3 years or 15?
• Owner-occupied or investment — will someone live there, will it be rented, or both?
• Appetite for risk — how would each of us cope if rates rose or one income stopped?
• Exit expectations — what's the plan if one of us wants out early?

Write the answers down. They'll drive every later decision.

Step 2: Choose the ownership structure

In Australia you'll hold the property as joint tenants or tenants in common. For most friends and unequal contributors, tenants in common is the right structure because it lets you hold unequal, definable shares and control who inherits them. Couples with equal contributions often choose joint tenants for the automatic right of survivorship.

We break this down fully in Tenants in Common vs Joint Tenants.

Step 3: Agree the deposit split — and record it

Deposits are rarely 50/50. One person may bring more savings, a family gift, or a First Home Super Saver amount. Two principles:

1. The title share should reflect contributions (under tenancy in common).
2. Every dollar should be recorded against the person who paid it — deposit, stamp duty, conveyancing, building and pest inspection, and any later renovation.

That record is what lets you calculate a fair outcome later, separate from the headline title split.

Step 4: Decide how the mortgage is split

Be deliberate here, because the repayment split doesn't have to equal the title split. You might agree:

• By title share — simplest, each pays their ownership percentage.
• By income — the higher earner covers more.
• By usage — if one owner lives there and the other doesn't.

Whatever you choose, track what each person actually pays. Over a 30-year loan, even a small monthly imbalance compounds into a meaningful equity difference — and that difference is exactly what gets disputed at exit if nobody recorded it.

Step 5: Plan the ongoing costs

Agree up front how you'll handle:

• Council rates and water
• Building and contents insurance
• Strata or body corporate fees
• Repairs and maintenance (and who decides when to spend)

For an investment, also note that deductions generally follow legal title, not who paid the invoice — so keep clean records for tax time.

Step 6: Write a co-ownership agreement

This is the step people skip and later regret. A co-ownership agreement is a private contract between owners that typically covers:

• Each owner's share and contributions
• The mortgage and cost split
• A first right of refusal so a leaving owner must offer their share to the others first
• How the property is valued at exit (e.g. an agreed independent valuer)
• A dispute-resolution process

Get independent legal advice — ideally each owner has their own solicitor, because your interests may differ. This document is cheap insurance against an expensive, relationship-ending fight.

Step 7: Plan the exit before you need it

Life changes. Someone gets a job interstate, has a child, or simply wants their capital back. Decide in advance:

• How much notice an exiting owner gives
• How the buyout price is calculated
• Who bears which costs (transfer duty, valuation, any capital gains tax)
• What happens if no one can afford the buyout (e.g. agreed sale)

A fair buyout is more than "your share of the value." It has to account for the outstanding mortgage, each owner's real contributions, and the transaction costs. We walk through the maths in how to calculate a fair buyout.

A simple worked example

Two friends buy a $700,000 unit as tenants in common, 60/40, with a $490,000 loan. One pays 70% of the repayments. Three years in, the 40% owner wants out. Their exit figure isn't simply 40% of today's value — it's their share of the equity (value minus the remaining loan), adjusted for the fact that they paid in less of the mortgage than their co-owner. Without a record of who paid what, that conversation is guesswork. With one, it's arithmetic.

Let Propact do the tracking

Propact keeps the contribution ledger, splits the mortgage the way you actually pay it, and shows each owner's fair equity over time — then estimates a fair buyout when someone exits. Try the demo on a sample property, or create your free account to set up your own place.

---

This article is general information, not legal, financial or tax advice. Speak to a licensed professional about your specific circumstances.