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Buying a home or investment property in Melbourne is exciting, but it also demands clear decisions about legal ownership. One of the first questions your conveyancer will ask is, "Do you want to register the title as joint tenants or as tenants in common?" Although the two phrases sound similar, they carry very different consequences for estate planning, tax, flexibility, and even family relationships. This guide breaks down each structure in straightforward terms to help you choose confidently.
Why Manner of Holding Matters in Victoria
In Victoria, the Land Transfer Act 2018 requires the incoming proprietors on a transfer of land to specify a manner of holding. If you leave the field blank, Land Use Victoria defaults you to joint proprietors (joint tenancy). Changing the structure later can be done, but it involves extra paperwork, lodgement fees and, in some cases, fresh stamp duty assessments by the State Revenue Office. Making the right choice upfront saves time, money and potential family disputes.
Key Definitions
Joint Tenancy: All owners hold an identical, undivided interest. When one dies, their interest disappears and passes automatically to the survivors (the right of survivorship). Most married or de facto couples buying a principal place of residence use this structure.
Tenants in Common (TIC): Each owner holds a distinct share (equal or unequal). On death, that share forms part of their estate and passes under their will. Blended families, siblings, friends pooling funds, passive investors, or couples with unequal contributions typically choose this option.
The survivorship feature is the single biggest legal difference: it overrides a will in joint tenancy but never applies in TIC.
How Shares Are Recorded
Joint tenancy – titles office records show the simple words "joint proprietors"; no fractions appear.
TIC – each proprietor's share (for example 50/50, 60/40 or even 99/1) is stated on the folio. These fractions drive everything from rent splits to capital gains calculations.
Because tenants in common may choose any combination of shares, the structure offers precise control when one party invests more cash, brings equity from another asset, or seeks a larger tax deduction.
Estate Planning Implications
Joint Tenancy and Probate
Joint tenancy bypasses probate. The surviving owner merely lodges an Application by Surviving Proprietor with Land Use Victoria, attaching the death certificate, and the title is updated within weeks. There is no stamp duty and usually no capital gains tax event at that moment.
Tenants in Common and Inheritance
TIC, by contrast, funnels the deceased's share through their will (or intestacy if no will exists). Probate is needed before the executor can deal with the property. This can be advantageous when you want children or a trust to inherit your share, but it also adds probate costs and possible delays in refinancing or selling.
Capital Gains Tax (CGT) and Income-Tax Differences
The Australian Taxation Office treats co-owners differently depending on structure:
Joint Tenancy Tax Implications
In joint tenancy, each party is deemed to own an equal interest for CGT purposes, even if they informally paid unequal deposits. When one joint tenant dies, CGT law deems their share to pass to the survivors, effectively resetting the cost base for that slice.
Tenants in Common Tax Benefits
In TIC, each owner declares rental income and deducts expenses in line with their recorded fraction. Unequal shares allow higher deductions for the lower income earner, which can improve after tax cash flow.
Because Melbourne's median house prices now exceed $900,000, even a modest capital gain can trigger significant CGT on sale, so structuring wisely from day one is critical.
Flexibility When Circumstances Change
Life happens: relationships end, partners change jobs, children arrive, or an owner wants to liquidate equity.
Severing a Joint Tenancy
Any joint tenant can file a unilateral notice with the titles office to convert the holding to TIC. The other party only needs to receive written notice; their consent is not essential. Once severed, shares default to equal unless otherwise agreed and transferred.
Adjusting Shares in TIC
You may transfer (for example) 10 per cent to a spouse to balance negative gearing. However, such transfers usually attract ad valorem stamp duty in Victoria and may realise a CGT event.
Converting back from TIC to joint tenancy is possible too, but it requires a formal transfer of the fractional interests into joint names and fresh mortgagee consent where a loan exists.
Pros and Cons at a Glance
Joint Tenancy
Pros:
- Simple paperwork on purchase and on death
- Avoids probate costs and delays
- Generally no CGT on transfer to survivor at date of death
- Perceived fairness for couples who treat assets as completely shared
Cons:
- Survivorship overrides your will, so children of a previous relationship may miss out
- Shares must always be equal (50/50 if two owners)
- Harder to shift tax benefits to a lower income partner
- Any owner can sever unilaterally, potentially creating conflict
Tenants in Common
Pros:
- Flexible shares – useful where contributions differ
- Each owner controls who inherits their portion
- Easier entry and exit for investors (you can sell your fraction)
- Tailored tax outcomes by allocating more rental loss to the lower income earner
Cons:
- Probate required on death, delaying refinance or sale
- Transfers of fractions usually trigger stamp duty
- Extra conveyancing costs to record unequal shares
- Potential for deadlock if owners disagree over selling the property
Typical Melbourne Property Scenarios
First Home Buyers
Most couples opt for joint tenancy because they regard the property as a shared family asset and appreciate the probate shortcut.
Blended Families
If each spouse has children from previous relationships, TIC lets them direct their share to their own children while still purchasing together.
Parents Helping Adult Children
Mum and Dad may take a 20 per cent TIC share secured by a family guarantee, leaving 80 per cent to the child and preserving first-home buyer concessions for the child's portion.
Friends Pooling Capital
For an investment unit in Carlton Unequal TIC shares (for example 40/40/20) reflect cash contributions and allow individual exits without unsettling everyone.
SMSF and Individual Co-ownership
A self managed super fund must hold its interest separately as TIC. It cannot be joint tenants with a member.
Each scenario illustrates the importance of matching ownership form to future goals.
Practical Steps Before You Sign
Discuss long term intentions – Who should ultimately benefit if an owner dies? Do you expect to sell within a few years or hold for decades?
Seek tax advice – An accountant can model CGT and income projections under each structure.
Review loan documents – Some lenders prefer joint tenancy for simplicity, though most accept TIC with fractional shares.
Confirm with your conveyancer – Your practitioner must complete the Transfer of Land form correctly. Errors can only be fixed with a costly Application to Amend Title.
Document side agreements – If you choose joint tenancy but contribute unequally, consider a co-habitation or loan agreement to record reimbursements should you sell or separate.
Frequently Asked Questions
Can we change from joint tenancy to TIC after settlement?
Yes. Your conveyancer prepares a Transfer of Interest to yourself and lodges it electronically via PEXA. Government lodgement fee is currently $123.30 plus any stamping that applies.
Does the State Revenue Office levy stamp duty on severance?
Severing a joint tenancy into equal TIC shares is usually duty exempt because ultimate ownership proportions remain the same, but check before lodging.
What happens to our mortgage if one joint tenant dies?
The loan continues in the survivor's name(s). Most lenders require the death certificate before removing the deceased from liability.
As tenants in common, can one owner force a sale?
Under the Property Law Act 1958 (Vic), a co-owner may ask the Supreme Court for an order of partition or sale if agreement cannot be reached. Litigation is costly, so mediation is recommended first.
Choosing the Right Property Ownership Structure
There is no universal answer. Joint tenancy offers simplicity and peace of mind for couples whose estates naturally merge. Tenants in common provides surgical precision for tax, succession, and complex investment arrangements. The key is aligning title structure with personal goals and family dynamics.
Next Steps
Selecting the correct ownership structure is more than just ticking a box at settlement; it shapes how your largest asset is controlled, taxed and ultimately passed on. Before you sign a contract, talk through your objectives with an experienced conveyancer who understands both the legal and human sides of property transactions in Melbourne.
Ready to make an informed choice?
Contact Pearson Chambers Conveyancing for clear guidance and a free Section 32 contract review today.
Phone: 03 9969 2405
Email: contact@pearsonchambers.com.au