When two people own a property together and sell it, the capital gain does not land on one tax return. It is split between the owners, each one pays tax on their own share at their own marginal rate, and each one gets their own 50% discount if the property was held for at least 12 months. Get the split right and a couple can save thousands compared with one person owning the lot. Get it wrong and the ATO’s data matching will catch the difference — here is how it works in 2026–27, with a worked example in real dollars.
The short answer
- The title decides the split, not the money. Joint tenants split everything equally; tenants in common split it in the shares on the title — 70/30, 80/20, whatever it says. Who paid the deposit or services the loan does not change it.
- Each owner is taxed separately. Each owner takes their share of the gain, applies the 50% discount to their share if the property was held 12 months or more, adds it to their own taxable income, and pays tax at their own marginal rate plus the 2% Medicare levy.
- The main residence exemption is per owner, not per property. If only one owner lives in the house, only their share is exempt. The other owner’s share is fully taxable.
- Changing the split later is itself a tax event. Transferring a share to your partner is a disposal at market value for CGT, and it usually attracts stamp duty as well.
- The gain arises on the contract date, not settlement — and a contract signed before 1 July 2027 keeps the 50% discount under the current rules.
Want to test your own numbers before you sell? Run the figures through our capital gains tax calculator and see what each owner’s share of the gain actually costs.
Joint tenants vs tenants in common: the split that matters
There are only two ways to own property with someone else in Australia, and the difference decides both the tax split and what happens when one owner dies.
Joint tenants: equal shares, automatic inheritance
Joint tenants each own an equal, undivided share. Two owners means 50/50; three means a third each. For CGT the ATO treats joint tenants as tenants in common with equal shares, so a couple selling a jointly held investment property each declares half the gain. When one joint tenant dies, their share passes automatically to the survivor — it does not form part of their estate and cannot be left to anyone else in a will.
Most married couples hold property as joint tenants. It is simple, and for tax it is usually the better deal when the two owners earn different amounts, because the gain is spread across two sets of tax brackets.
Tenants in common: unequal shares, your share is yours
Tenants in common own defined percentages that can be unequal — 70/30, 80/20, 60/40. Each owner’s share of any capital gain or loss follows their percentage exactly. A tenant in common can sell, mortgage or lease their own share without the other owner’s agreement, and when they die their share passes through their estate to whoever their will names.
This is the structure to use when the money going in is genuinely unequal and you want the tax outcome to reflect it — a parent putting in 80% of the deposit with a child contributing 20%, for example. But be deliberate: the percentages are set at purchase, and changing them later costs tax (more on that below).
| Joint tenants | Tenants in common | |
|---|---|---|
| Shares | Always equal | Can be unequal, as recorded on the title |
| Gain split | Equally between owners | In the title percentages |
| On death | Share passes automatically to the survivor | Share passes through the estate to the will’s beneficiary |
| Can you sell your share alone? | No — you own the whole property together | Yes |
| Typical use | Married and de facto couples | Siblings, friends, parents and children, business partners |
How the gain is split, step by step
CGT on a jointly owned property is worked out in the same order as any property sale — the only difference is that the last steps happen separately for each owner.
Step 1: Work out the total capital gain. Sale price less the cost base. The cost base is the purchase price plus purchase costs (stamp duty, legal fees), plus improvements, plus selling costs, less any capital works deductions and decline-in-value deductions claimed while the property was rented. The ATO’s own example makes this concrete: Karl and Louisa bought a rental as joint tenants for $750,000, added $30,000 purchase costs and $6,000 of improvements, deducted $35,000 of capital works and $5,000 of decline in value, and paid $10,000 to sell — a $756,000 cost base against a $900,000 sale price, a $144,000 gain. Our CGT cost base guide walks through all five elements in detail.
Step 2: Split the gain by ownership percentage. Joint tenants halve it. Tenants in common split it by their recorded shares. A $200,000 gain on a 70/30 property is $140,000 to one owner and $60,000 to the other — regardless of who actually paid for what.
Step 3: Apply each owner’s capital losses. Each owner offsets their own current-year and carried-forward capital losses against their own share of the gain. Losses cannot be transferred to the other owner, even a spouse. If one owner has a $30,000 loss from shares and the other has none, only the first owner’s share is reduced. Losses are applied to the gain before the discount — the ordering matters when you hold both discounted and undiscounted gains.
Step 4: Apply the 50% discount to each owner’s share. If the property was owned for 12 months or more, each individual owner halves their remaining gain. The discount is per owner, not per property — so if one owner is a foreign resident, their share gets no discount while the resident owner’s share still does. More on that below.
Step 5: Add it to each owner’s taxable income. Each owner reports their own net capital gain at item 18 of their tax return, and it is taxed at their own marginal rate plus the 2% Medicare levy. The 2026–27 resident rates are 0% to $18,200, 15% from $18,201 to $45,000, 30% to $135,000, 37% to $190,000 and 45% above. Our 2026–27 income tax rates guide has the full brackets.
Worked example: a couple sells an investment property
Sarah and Tom bought an investment unit in Brisbane as joint tenants in November 2019. They sell it in June 2027. Sarah earns $95,000 a year; Tom earns $52,000.
| Item | Amount |
|---|---|
| Purchase price (Nov 2019) | $620,000 |
| Purchase costs (stamp duty, legal fees) | $28,000 |
| Improvements (new kitchen, 2021) | $22,000 |
| Selling costs (agent, legal) | $12,000 |
| Less: capital works deductions claimed | −$18,000 |
| Less: decline in value deductions claimed | −$4,000 |
| Cost base | $660,000 |
| Sale price (contract June 2027) | $940,000 |
| Total capital gain | $280,000 |
They owned the property for more than 12 months, so the 50% discount applies. Each owner takes half:
| Sarah ($95,000 income) | Tom ($52,000 income) | |
|---|---|---|
| Share of gain (50%) | $140,000 | $140,000 |
| 50% CGT discount | −$70,000 | −$70,000 |
| Net capital gain added to income | $70,000 | $70,000 |
| Extra income tax | $23,100 | $21,000 |
| Extra Medicare levy (2%) | $1,400 | $1,400 |
| Total extra tax | $24,500 | $22,400 |
Sarah’s $70,000 takes her from $95,000 to $165,000 — $12,000 at 30% plus $11,100 at 37%. Tom’s $70,000 takes him from $52,000 to $122,000, all at 30% — $21,000. Combined, the couple pays $46,900 on the gain.
If Sarah had owned the property alone, the whole $280,000 gain would be hers: after the discount, $140,000 on top of her $95,000 income takes her to $235,000 — $52,600 in extra income tax plus $2,800 Medicare. Joint ownership saves this couple $8,500, purely because the gain is spread across two sets of brackets instead of being stacked on one high income.
The saving is biggest when the owners earn very different amounts and smallest when both earn similar high incomes. Either way, the split is decided by the title at purchase, not by a choice at sale time.
The trade-off nobody prices: the split costs you while you hold
Splitting the gain is only half the story — every deduction is split the same way while you own the property, and that cuts the other direction. Take a property losing $12,000 a year. If Sarah owned it alone, the whole loss would come off her $95,000 income at 37%, saving $4,440 a year. Split 50/50, Sarah deducts $6,000 at 37% ($2,220) and Tom deducts $6,000 at 30% ($1,800) — $4,020 between them, $420 less every year.
Over a seven-year hold that is roughly $2,940 given away against an $8,500 saving at sale. The sale usually wins for a long hold, especially if the high earner retires before selling — but for a short hold or a small expected gain, the annual cost can outweigh the saving. This is the calculation to do before you buy, not after.
Main residence exemption when only one owner lives there
This is the most common misunderstanding in jointly owned property. The main residence exemption is not a property-wide switch. It applies to each owner’s interest separately, based on whether that owner lived in the dwelling.
Siblings example. Maya and her brother Ben buy a unit as tenants in common — Maya 60%, Ben 40%. Maya lives there the whole time; Ben never does. They sell for a $200,000 gain. Maya’s 60% share ($120,000) is fully exempt as her main residence. Ben’s 40% share ($80,000) is fully taxable — after the discount, $40,000 is added to his income, costing him $12,000 in tax plus $800 Medicare levy on an $80,000 salary. The ATO community confirms exactly this split: each owner is assessed on their own interest.
Spouses with different homes. A couple can only have one main residence between them for any period. If each spouse owns a home and they nominate different ones, the exemption is split — and there is a trap: if you own 50% or less of the home you nominate, the whole period you lived apart counts as your main residence, but if you own more than 50%, only half of that period counts. The ATO’s own example (Kathy and Grahame, townhouse 70/30, beach house 50/50) shows Grahame disregarding only $40,007 of his $70,000 share of the townhouse gain because of this rule. If you and your spouse live in different homes, get advice before you sell either one. Our main residence exemption guide covers the moving-out scenarios in detail.
Moving into a jointly owned investment property. If you move into a property you already co-own, the exemption only starts from when you move in — the rented years are taxable, the lived-in years exempt, for your share only. Your co-owner’s share stays taxable unless they move in too.
What happens when a co-owner dies
Death changes the ownership, and the tax treatment depends entirely on which kind of co-ownership you chose.
Joint tenants. The deceased owner’s interest passes automatically to the survivor. For CGT it is treated as if it passed through the deceased’s estate to the survivor as beneficiary. The survivor does not get a stepped-up cost base — they inherit the deceased owner’s cost base for that share, and the 12-month clock keeps running from the original acquisition date. If the property was the deceased’s main residence, the survivor may claim the main residence exemption on the acquired interest. If the property was acquired before 20 September 1985, the survivor’s original half stays pre-CGT while the inherited half is treated as a post-CGT asset acquired at the date of death.
Tenants in common. The deceased owner’s share becomes an asset of their estate and passes to whoever the will names — which may be someone other than the surviving co-owner. The beneficiary inherits the deceased’s cost base, and the main residence exemption can apply to that share if the property was the deceased’s main residence and the beneficiary sells within the usual two-year window. Our CGT on inherited property guide works through the two-year rule in full.
Either way, the surviving co-owner keeps their own original share with its own original cost base. Nothing about the death resets or revalues their half.
Foreign resident co-owners
If one co-owner is a foreign resident, their share is taxed on different rules. The 50% CGT discount does not apply to the foreign resident’s share for the period they were a foreign resident — for property acquired after 8 May 2012, no discount at all on that share — while the resident co-owner still gets their full 50% discount on their own share. The main residence exemption is not available to foreign residents either, so a foreign resident co-owner cannot shelter their share even if they lived in the property. And on settlement, the 15% foreign resident capital gains withholding applies to the foreign resident vendor’s share when the property is worth $750,000 or more — a credit against the tax actually owed, not extra tax, but it comes straight out of the settlement funds.
With a mixed-residency couple, the two halves of the same sale can produce wildly different tax bills. Our non-resident CGT guide covers the withholding and clearance-certificate mechanics in detail.
Changing the ownership split later
The question every accountant hears: “Can we change the title to 99/1 before we sell, so the gain lands on the low earner?” The answer is that the change itself is taxed.
Transferring an interest is a CGT event, and the transferor is treated as receiving the market value of the interest — even if no money changes hands. On Sarah and Tom’s property, transferring a 49% share when the total gain is $280,000 triggers a gain of roughly $137,200 on that share (before the 50% discount), payable in the year of the transfer, plus stamp duty in most states. The tax saved at the eventual sale is usually smaller than the tax paid to get there.
One exception: transfers between spouses on relationship breakdown can qualify for rollover relief, so no gain arises at the transfer. Our CGT on divorce guide explains the rollover rules. Outside a breakdown, restructuring ownership shortly before a sale does not work — the transfer is a disposal at market value.
Common mistakes
1. Declaring the gain in the proportions you paid, not the title. You put in 80% of the deposit but the title says 50/50? The ATO taxes you 50/50. The split on your return has to match the title.
2. Claiming the whole main residence exemption when only one owner lived there. Your spouse’s share is exempt; yours is not. Each owner claims only their own share.
3. Forgetting that deductions reduce the cost base. Every dollar of capital works and decline-in-value deductions claimed while renting comes off the cost base, which increases the gain — the ATO’s example shows $40,000 of deductions lifting the taxable gain by exactly that amount.
4. Using the settlement date instead of the contract date. The CGT event happens when you enter into the contract, not at settlement months later — a contract signed in June 2027 is a 2026–27 gain even if settlement is in September. It also decides which discount rules apply: a contract signed before 1 July 2027 keeps the 50% discount; from 1 July 2027 the new indexation plus 30% minimum-tax rules apply. See our CGT reform 1 July 2027 guide.
5. One owner claiming the other’s capital losses. Losses belong to the owner who made them. Your spouse’s share-market loss does nothing for your half of the property gain.
6. Assuming the surviving owner gets a fresh cost base. When a co-owner dies, the survivor inherits the deceased’s cost base on that share. There is no step-up to market value.
Tips for co-owners
- Decide the split before you buy, with the sale in mind. The percentages on the title are close to permanent. Think about who will earn what in the year you expect to sell — retirement, a career break, a low-income year — not just who earns what today.
- Keep one shared record file. Purchase contract, stamp duty receipt, improvement invoices, depreciation schedules, selling costs — each owner needs their share of every figure, and the ATO expects you to have them.
- Check the 12-month clock per owner. If one owner bought their share later than the other, their 12 months run later — the discount applies to each share on its own timeline.
- Model the sale before you sign the contract. A $280,000 gain split two ways cost Sarah and Tom $46,900; in one name it would have cost $55,400. Run your own figures through our CGT calculator and our income tax calculator before you commit to a price or a date.
- If the ownership is unequal, put it in writing. Tenants in common percentages should be on the title and in a co-ownership agreement covering who pays what, who can sell, and what happens on death. It prevents both tax disputes and family ones.
FAQ
Do both owners pay CGT if only one owner is on the loan?
Yes. The loan is irrelevant — what matters is the legal ownership on the title. If you are both on the title 50/50, you each declare half the gain even if only one of you borrowed the money.
Can my spouse and I split the gain 99/1 to save tax?
Only if the title actually says 99/1. You cannot choose a split on your tax return — it has to match the legal ownership. Changing the title to 99/1 before selling is itself a CGT event at market value, plus stamp duty, so it rarely saves money.
My partner lives in our jointly owned house but I don’t. Is my share exempt?
No. Only your partner’s share is exempt as their main residence. Your share is taxable on sale, though you still get the 50% discount if you held it for 12 months or more.
What happens to CGT when my joint tenant dies?
Their share passes to you automatically. You inherit their cost base for that share — there is no step-up to market value — and the 12-month ownership clock continues from their original purchase. If the property was their main residence, you may be entitled to the main residence exemption on the inherited share.
Does a foreign resident co-owner lose the 50% discount?
Yes, on their share, for the period they were a foreign resident — and for property acquired after 8 May 2012, no discount at all on that share. The resident co-owner still gets their full 50% discount. The 15% foreign resident withholding also applies to the foreign resident’s share on properties worth $750,000 or more.
We own as tenants in common 70/30. Can we change it to 50/50 when we retire?
You can, but the transfer of the 20% share is a disposal at market value, and stamp duty will usually apply. Work out the tax on the transfer first — in many cases it wipes out the saving you were chasing.
Conclusion
Joint ownership splits the tax the same way it splits the property: by the title, per owner, at each owner’s own marginal rate. That split is worth real money — $8,500 on a $280,000 gain for the couple in our example — but it cuts both ways, halving the deductions while you hold and limiting the main residence exemption to the owner who actually lives there. The percentages are set at purchase and expensive to change, so think about the tax outcome before you sign the purchase contract, not the sale contract. Check your title, model the numbers, and keep the records — the split follows the title, and it is costly when you assume it follows the money.
Sources: ATO — CGT when selling your rental property; ATO — Co-ownership and right of survivorship; ATO — Capital gains tax and the main residence exemption. General information only — not personal financial advice.
