Buying property with others: A guide to success.
When people buy property together, they have a number of options when it comes to registering the title. They can put the title in both people's names, or they can have only one person's name on the title. There are pros and cons to both arrangements, and the best option for you will depend on your individual circumstances.
Joint Tenancy
One option is to register the title as a joint tenancy. This means that both people own the property equally, and if one person dies, their share automatically passes to the other person. This is the most common arrangement for couples who buy a property together.
Tenancy in Common
Another option is to register the title as a tenancy in common. This means that each person owns a specific share of the property, and that share does not have to be equal. For example, one person could own 60% of the property and the other person could own 40%. Shares in a tenancy in common can be transferred to someone else, and when one person dies, their share passes to their heirs.
Legal Liabilities
There are some important legal implications to consider when choosing between a joint tenancy and a tenancy in common. For example, if you are a joint tenant and you fall behind on your mortgage payments, the lender can force the sale of the property to recover their money. However, if you are a tenant in common, the lender can only force the sale of your share of the property.
Tax Implications
There are also some tax implications to consider when buying property with others. For example, if you sell a property that is not your main residence, you will have to pay capital gains tax on the profit. However, the amount of capital gains tax you pay will depend on how the property is registered. If the property is registered as a joint tenancy, you will have to pay capital gains tax on your entire share of the profit, even if the other person has not contributed to the purchase price. However, if the property is registered as a tenancy in common, you will only have to pay capital gains tax on your own share of the profit.
Conclusion
There are a number of factors to consider when buying property with others. The best option for you will depend on your individual circumstances and your goals for the property. It is important to speak to a lawyer and a financial advisor to get advice on the best way to register the title and the tax implications of your purchase.
Here are some additional tips for buying property with others:
Get everything in writing. This includes the purchase agreement, the terms of the tenancy, and any other relevant documentation.
Make sure everyone is on the same page about their financial obligations.
Have a plan for what will happen if one of the owners wants to sell the property.
Be prepared to compromise. Buying property with others is a partnership, and you will need to be willing to work together to make sure the arrangement is successful.
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