As home prices continue to rise, more buyers are pooling resources to enter the market, whether as friends, siblings, or unmarried partners. But buying a home together is only the beginning.
From mortgage payments and property taxes to repairs and utility bills, co-owners take on a range of financial responsibilities that need to be shared thoughtfully and transparently.
To avoid confusion and resentment down the line, co-owners need to agree on how those expenses will be handled. That means figuring out how to split costs fairly, track payments, and prepare for unexpected expenses—ideally before the move-in date.
How to handle mortgage payments when you co-own a home
When you co-sign a mortgage, both names go on the loan, and both parties are equally responsible for the full amount. If one person can’t pay, the other is still on the hook.
The lender doesn’t care how you divide the monthly payment—the lender just wants it paid in full and on time. That means it’s up to you and your co-owner to agree on how costs are split. Some choose 50-50; others divide payments based on income, down payment contributions, or credit strength.
Whatever your arrangement, it’s wise practice to put it in writing. A simple co-ownership agreement can clarify expectations and help prevent conflict if circumstances change.
If the property is a business investment, then forming an LLC can help separate personal finances. Through it, you can define payment obligations, ownership shares, and exit terms in a formal document. It also helps protect your personal credit if the other owner defaults.
This is different from how married couples buying a home structure a joint mortgage, where they might choose only one spouse to be on the mortgage because they have better financials. Also, only one person is responsible, for instance, if one spouse defaults or moves out.
In a traditional marriage, mortgage borrowing often looks different. Sometimes only one spouse is listed on the mortgage if they have significantly better credit or income. In that case, only that spouse is legally responsible for repaying the loan—even if both are listed on the property deed or contribute to payments.
What co-owners need to know about home insurance
Homeowners insurance is important for protecting the home you own together. Usually, one person can apply for the policy, but it’s crucial to list all co-owners on it. Insurance companies care more about who’s listed on the property title than who’s on the mortgage, since that shows who legally owns the home. If someone’s name is left off the policy, it could cause problems if you ever need to file a claim or deal with damage or liability.
Because credit scores can affect how much you pay for insurance, it might make sense for the person with better credit to apply. Just make sure everyone else is still properly included on the policy.
Make sure the policy includes enough coverage to fully rebuild or repair the property in case of a major event like a fire or storm. It should also cover both of your personal belongings and include strong liability protection in case someone gets injured on the property or there’s accidental damage to someone else’s home.
If you’re unsure how to set things up, talk to an insurance agent to make sure your coverage reflects how the home is owned.
Don’t forget the tax implications—both property and capital gains
Don’t overlook the tax implications that come with co-owning a home, both while you own it and when you eventually sell.
Property taxes are typically paid through your mortgage escrow or separately, but it’s important to agree in advance on how those payments will be divided fairly. Keep good records of who pays what, especially if you’re not splitting costs 50-50.
When it comes time to sell, each co-owner should also keep documentation showing how long they lived in the home. That’s because the IRS allows individuals to exclude up to $250,000 in capital gains from the sale of a primary residence, but only if they meet residency and ownership requirements. If only one person lived in the home full time, only they may qualify for the exclusion.
It’s also a good idea to agree ahead of time on how profits will be split after a sale, and who will claim common deductions—like mortgage interest and property taxes—on their individual tax return. Having a clear agreement in place can help prevent confusion, or conflict, when it’s time to file taxes or divide proceeds.
Splitting maintenance costs and monthly bills without resentment
Sharing a home means sharing the costs of keeping it running, from utility bills to emergency repairs, and being proactive about how you divide those expenses can help prevent resentment down the line.
Start by having an open conversation about how you’ll handle monthly bills like electricity, internet, and water, as well as ongoing maintenance such as HVAC tuneups, lawn care, or plumbing issues.
You’ll also want to discuss how you’ll approach unexpected repairs or bigger renovations since these expenses can add up quickly, and disagreements about when or how to spend money on the home can strain even strong relationships.
To stay organized and transparent, consider setting up a shared household budget or using an expense-tracking app. Some co-owners even opt to open a joint bank account solely for home expenses.
Decide early whether you’ll split everything 50-50 or contribute based on income just as you did with the mortgage payment. There’s no one right answer, as long as both parties believe the arrangement is fair. Co-ownership works best when expectations are aligned upfront, so the more you plan now, the less likely you are to run into friction later.
