Navigating Property Rights: What Happens in a Non-Living Relationship?

Questions surrounding property rights and relationships often arise when couples separate or navigate complex living arrangements. A recent inquiry from an individual who recently separated highlights this issue, particularly focusing on property ownership when partners do not cohabit. The individual, who purchased a house independently after the separation, seeks to understand their rights concerning a partner they do not intend to live with.

According to Nicola Peart, a law professor at Victoria University, the critical factor in such situations is whether the relationship qualifies as a “de facto” relationship under the Property Relationships Act. This legislation outlines various elements that may define such a relationship, including the nature of the partnership, financial interdependence, and mutual commitment, among others.

Peart emphasized that while many associate property disputes with couples who live together, it is still possible for non-cohabiting partners to have legal claims. “Not living in the same house or not sharing finances does not exclude the possibility that a de facto relationship exists,” Peart noted. For individuals in similar situations, she advises considering a legal contract to protect separate property interests.

Another inquiry came from an individual concerned about inheritance rights following a recent breakup. After a partner received an inheritance in September 2023, the question arose regarding entitlement to those funds after a split just five weeks prior. Peart indicated that the ownership of the inheritance would depend on how it was managed. If the funds were used for shared expenses or placed in a joint account, they could be considered relationship property, making the former partner entitled to a portion. However, if the inheritance remained separate, claims may not be possible. Consulting a lawyer would be advisable in such cases to navigate the complexities of separation agreements.

In addition to relationship property queries, individuals involved in property investments have raised questions about tax implications on losses. Previously, property investors could offset losses from rental investments against other income sources, potentially resulting in tax refunds. However, this changed with the introduction of the 2019 residential loss ring fencing rules, which restrict losses to be applied only against profits from residential properties.

Robyn Walker, a tax partner at Deloitte, explained that these rules prevent investors from using losses to reduce their taxable income from other sources. Instead, losses can only be carried forward to future years or offset against profits from other properties within a portfolio. Walker also mentioned the recent reinstatement of interest deductibility, which allows investors to include interest payments in their property profit calculations, potentially lowering their tax bills.

Another recent development is the Investment Boost policy, which offers a 20 percent deduction for new business assets acquired after May 22, 2025. This policy excludes residential properties and improvements but may apply to identifiable chattels associated with residential properties.

These topics underscore the importance of understanding property rights and taxation rules, especially as they pertain to relationships and investments. Individuals facing similar circumstances should seek professional legal and financial advice to navigate these complexities effectively.

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