Tips for buying a property – What you need to know about joint property ownership
Many Hongkongers dream of owning a home. In order to do that, many newlyweds would chip in for the down payment. When you are buying a home with your significant half, will you choose joint tenancy or tenants in common? Do you know their difference?
For joint tenancy, when one of the owners in a joint tenancy dies, that survivor co-owner shall automatically get the deceased’s share over the property. In other words, the one who lives the longest will have the full ownership eventually. As for tenants in common, when one of the owners passes away, that share of the decedent tenant will be transferred according to the terms of the will or to the heirs, rather than to the survivors.
Peter has two units under his name. He co-owns unit A in joint tenancy with his wife Lily and unit B with his business partner Tommy as tenants in common. If Peter passes away, the share of unit A will be automatically passed to Lily whereas that of unit B will be distributed according to his will rather than automatically going to Tommy.
Different types of ownership will determine the right toward a property in the long run. Therefore, be extra careful when making the decision. In addition to the relationship with the co-owner, you should also take into consideration the tax that may incur for the sale of the property in the future.