One of the key decisions to be made when investing in a property is what “name” should the property be held in.
For most people starting out and investing in property for the first time, the property will normally be held by the individual or – if more than one investor is involved – in joint names.
Consideration needs to given however to the best form of ownership between the partners. A married or de facto couple may choose to be joint tenants, thus owning the property jointly on a 50/50 basis with the surviving owner gaining full ownership in the event of the death of either partner.
Taxation considerations however may mean that the partners become tenants-in-common with each partner owning a specific portion of the property and being free to “deal” with their portion as they wish.
If, for example one member of a couple is a high income earner, the couple may choose to be tenants-in-common with the high income earner owning up to 99% of the property to ensure that he is able to take advantage of 99% of the negative gearing. Be warned however, that this approach can have serious negative tax consequences in the longer term.
More experienced property investors may choose to hold the property in a company, discretionary trust or Self Managed Superannuation Fund (SMSF).
All options should be discussed with your accountant/financial advisor, as each options has its advantages and disadvantages.