Co‑Owner Income: How to Make More Money from Shared Property

If you own a slice of a house with someone else, the money you get from that property is called co‑owner income. It can come from rent, an owner's draw, or the profit when you sell. The good news? You don’t need a huge loan or a full‑time job to start earning. The bad news? If you don’t understand the rules, you could lose cash or face tax trouble.

How Profit Splits Actually Work

First, figure out how many shares each person holds. If you own 30 % and your partner owns 70 %, you get 30 % of any rental cash or sale profit. That sounds simple, but make sure the share percentages are written in the legal agreement. Without it, you might end up arguing over who owes what.

Next, decide how you’ll collect the money. Some co‑owners use an "owner’s draw" – a regular payment taken out of the rental income. The draw amount should match the ownership share, or you’ll get a tax surprise later. In our “Do I Pay Taxes on Owner's Draw?” article we explain that the draw is taxable income, just like a salary.

When you rent out the property, set a rent that covers the mortgage, insurance, and a little extra for maintenance. Anything left over can be split according to shares. For example, a £1,200 monthly rent that leaves £200 after expenses would give you £60 if you own 30 %.

Tax and Legal Tips for Co‑Owners

Taxes are the trickiest part. Each co‑owner must report their share of rental profit on their personal tax return. If you take an owner's draw, you still report the same amount as rental income, not as a loan. Missing this step can trigger penalties.

Keep good records: receipts for repairs, mortgage statements, and the exact draw amounts. A tidy ledger makes filing easier and helps you prove your share if a dispute pops up.

Also watch out for joint ownership risks. Our "Joint Ownership Risks" post warns that disagreements over renovations or selling the property can become legal battles. A clear exit strategy – like a buy‑out clause – can save you headaches.

Lastly, consider using a limited company to hold the shared property. This can lower your personal tax rate and protect personal assets, but it adds setup costs. Talk to a tax adviser before making the switch.

In short, co‑owner income can be a steady side hustle if you sort out the share percentages, set up a regular draw, and stay on top of tax reporting. Keep the paperwork tidy, talk openly with your co‑owner, and use the tips from our rental profit and tax guides. With those steps, you’ll turn a shared house into a reliable source of passive income.