Embarking on the journey of marriage or de facto relationship often comes with many financial decisions. One of the most significant decisions involves the ownership of property.
Adding your spouse or de facto partner to your existing property title is common practice but it is not a decision to be taken lightly. It can have profound implications on tax, estate planning and, even your relationship with your partner.
The key factors you need to consider before adding your partner to your property title include:
1. Legal Implications
The first crucial step is understanding the different property co-ownership arrangements that you will enter into with your spouse or de facto partner and whether you will own the property as joint tenants or as tenants in common.
Read more about Joint Tenancy and Tenancy in Common here.
2.Tax Consequences
If your property has increased in value since your initial purchase, a Capital Gains Tax (CGT) event may occur, and you could be liable to pay CGT on the transfer. In certain instances, stamp duty might also apply unless you are exempt.
3. Financial Risk
When you add your partner to your property title, you are effectively giving them a portion of ownership of your property. If your partner has financial issues, including unpaid debts or bankruptcy, your property could be a risk. Creditors might be able to claim against your property to settle any outstanding debts.
If you have a mortgage on your property, you may be required to refinance your home loan to add your partner. Your lender may need to assess the financial risk of your partner before approving the new loan.
4. Estate Planning & Future Planning
If you choose to be joint tenants, you cannot leave your share of the property to someone else in your Will as it will automatically pass to your partner at the time of your death. If you prefer to have control over your share, tenants in common might be a better option.
Adding your partner to your property title may influence your future financial plans, such as obtaining loans or buying additional properties. Your borrowing capacity could be impacted (positively or negatively) if both names are on the property title.
5. Paperwork and Legal Fees
The process of adding a spouse or de facto partner to a property title involves legal paperwork and costs associated including conveyancing fees, land titles office registration fees and potentially stamp duty.
Our experienced property team can assist in advising on the legal implications and the necessary legal work involved in adding your partner to your property title. Our estate team can assist you in incorporating the ownership interest in your estate plan and our family law team can assist you with any binding financial agreement you may wish surrounding the terms of transfer.
Key Takeaways
Adding your spouse or de facto partner to your property title is a significant decision that requires careful consideration. Ensure that you make an informed decision that suits your circumstances and aligns with your long-term financial goals.
Every couple’s situation is unique, and what works for one couple may not work for another. Do your homework, obtain professional advice, and make the decision that is right for both of you.
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Article By: Tiffany Monorom
Property Lawyer
Tiffany’s focus is to deliver excellent legal service and client experience, in particular, helping first home buyers navigate the complexities of purchasing their first home. She prides herself on being exceptionally efficient and approachable, ensuring that matters are dealt with in a timely manner and that clients are kept well-informed on the progress of their matter.