Buying a Sydney Property With Friends or Family: Structures, Risks and the Agreement You Cannot Skip

Why people co-buy in Sydney in 2026

Sydney's median house price now sits above $1.5 million across most metro areas, with units in the inner and middle rings still pushing past $900,000. On a 20% deposit, that's $300,000 of cash needed before a single bank fee, plus stamp duty, conveyancing, building reports and lenders' mortgage insurance if you go in below the 20% line. For a single-income buyer earning $120,000, the deposit alone is roughly four years of post-tax savings — and the mortgage that follows still has to clear APRA's serviceability buffer at three percentage points above the actual rate. Co-buying solves both halves of the problem at once: two deposits combined often clear the 20% line, two incomes combined often clear serviceability, and the property gets bought in 2026 instead of 2030. The trade-off is structural risk you don't carry as a sole buyer, which is what the rest of this guide is about.

The two co-ownership structures in NSW

NSW property law, governed by the Conveyancing Act 1919 (NSW), recognises two ways two or more people can hold title together. Joint Tenancy means all co-owners hold an equal, undivided interest in the whole property — there are no defined percentage shares, and the structure carries an automatic right of survivorship: when one joint tenant dies, their interest passes directly to the surviving joint tenants by operation of law, bypassing the deceased's Will entirely. Tenants in Common is the opposite: each owner holds a defined, distinct share (50/50, 70/30, 60/20/20 — whatever is agreed and recorded on title) and there is no right of survivorship. A tenant in common's share passes via their Will to whoever they nominate, not automatically to the other co-owners. The structure you choose dictates what happens on death, on divorce, on default, and on any future sale.

Which structure to pick when

For most co-buyers in Sydney, Tenants in Common is almost always the safer choice. Joint Tenancy makes sense in a narrow set of relationships — typically married couples and long-term de facto couples who genuinely want survivorship to override their Will and who hold the property roughly equally. For everyone else, Tenants in Common gives you control, clarity and an exit route.

• Joint Tenancy: married or de facto couples wanting survivorship simplicity and equal interests
• Tenants in Common: friends co-buying — almost always
• Tenants in Common: siblings co-buying — almost always
• Tenants in Common: parent and adult child where contributions are unequal
• Tenants in Common: any co-buyer who wants to leave their share to someone other than the other co-owner
• Tenants in Common: any unequal cash contribution that should be reflected on title

The co-ownership agreement — the single most important document

The contract of sale and the loan documents will get drafted by your conveyancer and your lender as a matter of course. The co-ownership agreement won't — you have to ask for it, and you have to insist on it being signed before the contract of sale settles. It is a separate written agreement between the co-owners (not the bank, not the vendor) that governs the relationship between you and the people you're buying with. A typical Sydney co-ownership agreement runs five to fifteen pages and is drafted by a property solicitor for $1,500 to $3,000. Treat that cost as cheap insurance against a relationship dispute that could otherwise cost six figures to litigate.

• Who pays what percentage of the deposit, stamp duty and upfront costs
• Who pays what percentage of the monthly mortgage repayment, council rates, water, strata and insurance
• Who pays for maintenance and capital improvements, and at what threshold one owner can spend without the other's consent
• How decisions get made — unanimous consent, majority, or category-based (small vs large)
• What happens if one party wants out — right of first refusal to the others, valuation method, payout window
• What happens on death, default, divorce or bankruptcy of any co-owner
• How the property gets sold and how proceeds are split, including who covers selling costs
• Dispute resolution — mediation first, then partition action as a genuine last resort

Finance structures — joint loan or separate loans

Most Sydney lenders will only offer one practical finance structure for co-buyers: a single joint loan in all co-owners' names, secured against the property as a whole. This is the path the major banks are set up for, and it's the cheapest in terms of upfront and ongoing fees. A small number of non-bank and specialist lenders will offer separate loans where each co-owner has their own mortgage over their share of the property, but these are harder to qualify for, more expensive, and clearer only on the exit. The joint loan is what you'll almost certainly end up with — and the consequences of that structure are the single biggest risk in the whole arrangement, which is the next section.

The joint and several liability trap

On a joint home loan, every borrower is jointly and severally liable for the entire loan amount — not just their share of it. If you and a friend buy a $1.2 million property 50/50 with a $960,000 joint loan, the bank does not see two $480,000 loans. The bank sees one $960,000 debt that both of you owe in full. If your co-buyer loses their job, stops contributing, or simply chooses not to pay, the bank's first move is to chase whichever borrower it thinks has assets — and that is often the one who has been paying religiously. The non-defaulting borrower's credit file takes the hit too: missed repayments report against both names, regardless of whose half was unpaid. The same trap applies if your co-buyer takes out other credit in the future — your shared mortgage shows up as a $960,000 liability on their credit file, which affects everything from their car loan to their next credit card.

Stamp duty and the First Home Buyer concession

Stamp duty in NSW is assessed on the property as a whole, not per owner, so co-buyers share the duty pro-rata to their ownership shares — a 70/30 Tenants in Common split pays 70% and 30% of the duty respectively. The complication is the First Home Buyer Assistance Scheme (FHBAS), which gives full or partial exemption on properties under the relevant price thresholds, but only to eligible first-home buyers. If one co-buyer is eligible and the other isn't (they've owned property before, they're not buying as their principal residence, they're over the income test), the concession applies only to the eligible buyer's share of the duty. On a $900,000 purchase between an eligible first-home buyer and an investor co-owner, the first-home buyer gets their share concessioned and the investor co-owner pays full duty on theirs. The maths can swing the structure significantly — see our full stamp duty guide for the current thresholds and the per-share calculation.

Sibling and parent-child structures

Parent-and-adult-child co-purchases are the fastest-growing category of Sydney co-buying, and they fall into three main patterns, each with different consequences. The right pattern depends on whose name needs to be on the title, who is taking the tax hit, and what the family is comfortable with in a worst case.

• Parent on title as a Tenants in Common minority shareholder: parent contributes deposit and goes on title for (say) 20%. Parent is liable for land tax on their share, pays CGT on sale of their share, and the child's First Home Buyer concession is lost on the parent's share. Cleanest legally, most expensive tax-wise.
• Parent gifts the deposit, no title share: parent transfers cash, child buys alone in their own name. Cleanest for tax (no land tax, no CGT for parent) and preserves the child's full First Home Buyer concession. Parent has no legal security if the relationship breaks down — fine in trusting families, painful in difficult ones.
• Parent acts as guarantor (limited guarantee): parent's own home is secured against a slice of the child's loan, typically the 20% deposit shortfall. Child gets a 100% loan without LMI, parent stays off title. Highest-risk option — if the child defaults, the bank can ultimately pursue the parent's home. Only use when the parent fully understands and can absorb the worst case.

Tax implications of co-ownership

Tax follows title shares, not who actually contributed the cash, and that catches a lot of co-buyers off guard. Rental income (if the property is rented at any point) is split per ownership share on the title, not per how much each owner is paying toward the mortgage. Capital gains on sale are split per ownership share — if you put in 70% of the deposit but the title says 50/50, you get 50% of the gain. Land tax is assessed per owner above each owner's individual tax-free threshold (see our land tax guide for current thresholds) — two co-owners get two separate thresholds, which can be a real benefit on investment properties. Negative gearing deductions, depreciation, interest and outgoings are all claimed per ownership share. Get an accountant or tax adviser to model the structure before you settle on percentages — adjusting the title share after settlement triggers fresh stamp duty.

Exit strategies — how a co-purchase actually ends

Every co-ownership arrangement ends — through sale, through one party buying the other out, through inheritance, or in the worst case through court order. The co-ownership agreement should walk through the first three; the fourth is a backstop only.

• Refinance and buy-out: the staying party refinances the loan into their sole name at an agreed valuation, pays out the leaving party's share of equity in cash, and continues solo. Smoothest exit but requires the staying party to qualify for the full loan alone.
• Sale to a third party: the property is listed, sold on the open market, the joint loan is paid out at settlement, costs are deducted, and remaining proceeds are split per ownership share. Standard exit when no one wants to keep the property.
• Sale of share to a co-owner or family member: leaving party transfers their share to the remaining party (or a relative) at an agreed valuation. Triggers stamp duty on the transferred share and potential CGT for the seller.
• Partition action under section 66G of the Conveyancing Act 1919 (NSW): a co-owner applies to the Supreme Court for an order to appoint a trustee to sell the whole property. Used as a last resort when co-owners cannot agree on exit. Slow (12-24+ months), expensive ($30,000-$100,000+ in legal costs), and divisive — the court almost always orders sale, but the relationship rarely survives.

The professional team you need before signing anything

Co-buying multiplies the number of moving parts in a standard purchase, and the right way to manage that is with the right professional advice in the right order, before any contract is signed. Treat this as a non-negotiable checklist.

• Conveyancer or property solicitor: drafts the co-ownership agreement, reviews the contract of sale, advises on title structure (Joint Tenancy vs Tenants in Common), handles settlement
• Financial planner: structures the overall arrangement around your wider financial position, retirement plans, life insurance and estate planning
• Tax adviser or accountant: models the per-share tax outcomes for income, capital gains, land tax and any negative gearing
• Mortgage broker: scopes finance options across the lender panel, models joint-loan serviceability, identifies the small set of lenders willing to consider separate loans if relevant
• Estate planning solicitor: updates each co-owner's Will to deal with their share (critical for Tenants in Common), considers Powers of Attorney for incapacity scenarios

Next step — don't sign anything without the agreement first

The single most common, most expensive mistake Sydney co-buyers make is signing the contract of sale, applying for the joint loan, and then dealing with the co-ownership agreement "once we settle." By that point, the leverage to agree on fair terms has evaporated — the money is in, the title is registered, and the only way to walk back a bad arrangement is through litigation. Get the co-ownership agreement drafted and signed before the contract of sale exchanges, even if the conversation feels awkward. A property solicitor charges $1,500-$3,000 for a tailored agreement; a fractured co-ownership without one routinely costs six figures to unwind. Our directory of Sydney conveyancers and Sydney financial planners lists vetted, licensed practitioners with experience in co-purchase structures from friends-and-family deals through to multi-generational family arrangements.

FAQ

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