Australia · 7 min read · Josh Barton · 20 Sep 2026

Co-Owning a House After Divorce in Australia: Keep It, Buy Out, or Sell?

The house is still in both names, and so is the mortgage. What a jointly owned home looks like after a split in Australia, the three ways it ends, and the paperwork that saves you stamp duty and CGT on the way through.

divorce
separation
buyout
australia
co-ownership

This article is general information only and is not legal, financial, tax, or property advice. Consider advice from a qualified professional for your circumstances.

Separating doesn't change the title

Separation changes who sleeps where, who pays for what and who has the kids on Wednesdays. It doesn't change the title or the mortgage — if the house was in both names in March it's in both names in April, and the bank will keep expecting the full repayment from either of you, whoever moved out. One of three things has to happen: one of you buys the other out, you sell it and split what's left, or you keep owning it together for a while on purpose.

That last option is more common than people admit, and it's the one that rarely gets any rules written for it. Before getting to it, a piece of housekeeping for the first week.

First, check how you hold the title

Most couples buy as joint tenants. It's the default a conveyancer reaches for, and it comes with a feature called survivorship: when one joint tenant dies, their share passes automatically to the other, regardless of what a will says. Fine for a couple. After a separation it means that if you died before the settlement was done, your half of the house would go to your ex — not to your kids, not to whoever your new will names.

You can sever the joint tenancy on your own. It's a form lodged with the land registry in your state (a "transfer severing joint tenancy" in NSW), it doesn't need your ex-partner's consent — they just have to be notified — and, where it leaves you with equal shares, it doesn't attract stamp duty. Once registered, you own the property as tenants in common in equal shares. It changes nothing about the eventual settlement; it just means your share is yours to leave. Family lawyers tend to do this early as a matter of routine. If yours hasn't mentioned it, ask.

If you bought as tenants in common already, you're set — joint tenants versus tenants in common explains the difference if you're not sure which you are.

Option one: keep the house together for now

Some separated couples keep the house for a while: the kids stay in the same school, the market's soft, neither person can refinance the whole loan alone yet, or nobody's ready to make the decision. There's nothing wrong with it as a plan — it just usually isn't one. No date, no split of the bills, no trigger for ending it, and the cost of not deciding turns up a year later.

Co-owning after a separation only works if you treat it like what it now is: two people who don't live together owning an asset. Write down:

Who lives there, and what that's worth. If one of you stays and the other pays rent somewhere else, the one staying is getting something. Agree whether they pay a notional rent to the other, pay more of the mortgage, or whether it's simply factored into the final settlement. When one co-owner lives in the property goes through the options.
Who pays the mortgage, rates, insurance and repairs, and in what shares. Not "we'll sort it out." Amounts, dates, and an account the money goes through.
How long it lasts, and what ends it. A date, a child's age, a sale price the market has to reach — pick a trigger. Without one, it ends when one of you runs out of patience, and you'll be negotiating a price with the person you least want to negotiate with.
What happens if one of you stops paying. Your arrangement is invisible to the bank; a missed repayment lands on both credit files.

Whatever you agree, get it into your formal settlement, because there's a clock running on it. For married couples, an application for property orders generally has to be filed within 12 months of the divorce order taking effect; for a de facto couple, within two years of separating. After that you need the other person's consent or the court's permission, which it only gives where there'd be hardship. Couples who "keep the house for now" and let the clock run can find they've lost the right to a settlement at all. Consent orders or a binding financial agreement can record that you're holding the house jointly until a trigger, and what happens then. That is your settlement, done — the time limit stops mattering.

Two more practical notes. Both of you are still on the loan, so your ex-partner's ability to borrow for their next place is reduced by a mortgage they're not living in — lenders count the whole debt against each borrower. And the main residence exemption from CGT follows where each of you lives: the one who moved out can sometimes keep treating the house as their main residence under the absence rule, but not while also claiming a new home, and that's a choice with consequences worth an accountant's hour.

Option two: one of you buys the other out

This is the one most people search for. Take the home's current value, subtract the mortgage, and you have the equity. Your ex-partner's share of that equity, under the settlement, is the payout. On a $720,000 house with $410,000 owing, the equity is $310,000, and at 50/50 you'd pay $155,000 to keep it. The divorce buyout calculator runs the numbers, and then does the part most people stop before: the refinance.

Your ex's name comes off the mortgage only when the lender agrees to it — usually a new loan in your name alone, occasionally a reassessed variation of the existing one — and either way the debt has to cover the old balance plus the payout: $565,000 in the example, on your income alone. Two incomes carried $410,000 without strain; one income now has to carry $565,000, and lenders decline that more often than separating couples expect. Have a broker run your serviceability before the payout is written into the orders, because once it's there it's very hard to walk back.

Three things make a separation buyout cheaper than buying out anyone else, and all three depend on doing it properly:

Stamp duty. A transfer of the home between separating spouses or de facto partners as part of the breakdown settlement is exempt from transfer duty in every state (Western Australia charges a nominal $20 instead). What each state accepts as proof differs: court orders, consent orders and binding financial agreements work everywhere, and NSW and Victoria will also take a written agreement or statutory declaration for a transfer made solely because of the breakdown. Get the paperwork sorted before the transfer, not after — on a $720,000 house, full duty would be a five-figure bill.
Capital gains tax. The relationship-breakdown rollover means any gain is disregarded at the transfer; the partner keeping the house takes over the other's cost base and deals with any gain only if they sell later. This one is stricter than the duty exemption: it applies to transfers under court orders, a binding financial agreement or an arbitral award, not to a private agreement between you.
The value. Settle how the house gets valued before anyone names a price: one valuer you both appoint, whose figure is final, or two averaged if you can't agree on one. An agent's appraisal is cheaper but softer, and the person it favours will always prefer it.

If you're buying out a co-owner who isn't a former partner — a sibling, a friend — the general buyout guide covers the duty and CGT you don't get to avoid.

Option three: sell it and split the proceeds

The option with the least paperwork and the most waiting. The property is sold, the mortgage and selling costs come off the top, and what's left is divided — by the settlement percentage, not the title. If the house was your main residence throughout, there's normally no CGT on the sale. Where one of you moved out and bought elsewhere, the exemption can be partial; check before you assume.

The friction is the process itself. Agree the agent, the listing price and the reserve in writing before the sign goes up, because a separated couple disagreeing about whether to accept an offer is a house that sits on the market. If one of you refuses to sell at all, the court can order it, but that's the slow and expensive route and best kept as leverage rather than a plan.

The title percentage isn't the settlement percentage

One thing catches people in all three options. The title says what you legally own — usually 50/50. The settlement says what you each walk away with, and the Family Law Act reaches that by looking at what each of you brought in and contributed, your future needs, and whether the result is just and equitable overall. Those can be quite different numbers. A 50/50 title can end in a 60/40 split of the equity, or the house can be traded off against superannuation or other assets entirely.

So when you're running a buyout or a sale, use the settlement share, not the deed. Which is why the calculator asks for the percentage instead of assuming half.

Staying co-owners means running it like one

A separated couple who keep a house are co-owners, and the same thing goes wrong for them as for any two co-owners: two years on, nobody can say who paid the rates in 2027 or what the "extra" mortgage payments were meant to count for. Laddered records the shares, the agreed contributions and every payment as they happen, so when the settlement is reviewed the history is a ledger, not a text thread.

Common questions

Can we keep the house in both names after divorce? Yes. Nothing forces a sale or transfer. But the mortgage stays in both names too, and the time limit for property orders — 12 months from the divorce order, two years from a de facto separation — keeps running, so record the arrangement in consent orders or a binding financial agreement.

Do you pay stamp duty when you buy your ex out? No, provided the transfer is part of the breakdown settlement — court orders, consent orders or a binding financial agreement work in every state, and some states also accept a written agreement. Western Australia charges a nominal $20 rather than nothing. A transfer done without that paperwork can be dutiable.

Is there capital gains tax when one partner keeps the house? Not at the point of transfer, where the relationship-breakdown rollover applies. The partner keeping the home inherits the original cost base, and CGT is only a question when they eventually sell — and the main residence exemption may cover some or all of it.

How is a house divided if it's 50/50 on the title? The settlement decides, not the title. The Family Law Act looks at contributions, future needs and overall fairness, so a 50/50 deed can produce an unequal split of the equity.

Property settlement, duty and CGT all turn on your circumstances and your state. Before you transfer, refinance or list: the orders need a family lawyer, the refinance needs a broker, and the CGT position needs an accountant — in that order, because the first decides what the other two are working with.