How Do You Own Your Property? Holding Title – Part III

As I’ve mentioned before, to own real estate you must hold title, and the way you hold title affects how the ownership of a property can be transferred and how the property can be financed, improved or used as collateral or taxed. This week I’ll talk about joint tenancy, community property, community property with the right of survivorship, sole ownership, and sole and separate property.

Remember, I am not an attorney or an accountant, and those are the people to talk to about your particular situation. This column will simply provide some information you may wish to discuss with your accountant and/or attorney.

Joint tenancy is similar to tenants in common, except that when one tenant takes his or her last breath, the other tenant owns the property immediately subject to any valid liens. No probate. No will. No hassle. And one half of the property value is stepped up to market value. Consequently, this arrangement is often used among family members.

The setup is a little quirky: to have joint tenancy, all parties must have the same percentage of ownership and must acquire title by the same deed. A joint tenancy can be created by tenants in common deeding to themselves as joint tenants after they own the property. But, unlike tenants in common, you must have equal ownership. Any of the individuals can sell their share, but that immediately invalidates the joint tenancy status and a tenancy in common is created between the remaining owner(s) and the new owner.

Community property is often the way spouses own property together. Each has the same share, and the liability is the same as with a single owner. One of the benefits of community property is how it is valued for tax purposes if one spouse dies. Both halves of the home are stepped up (or revalued to market value) and the remaining owner does not have to pay capital gains tax on the stepped up value. When this happens the basis for depreciation is also reestablished.

The not-so-good thing about community property is that ownership is not necessarily passed to the surviving spouse. The property must go through probate and can be willed to anyone the decedent chooses. So the surviving spouse may be stuck owning a home with an ungrateful stepchild. To avoid this, you can hold title as community property with right of survivorship. That way the stepchildren can’t make a claim on your home—well, they can try, but they won’t have a legal leg to stand on.

If you don’t want to share ownership with your spouse (or if you’re single), you can own a property all by yourself: if you’re married, it’s called sole and separate ownership; if you’re single, it’s simply called sole ownership. If you are the sole owner, you get to make all the decisions, unencumbered by a partner or spouse; however, you also get to shoulder all the liability.

If you’re married with sole and separate ownership, your spouse has no claim on the property. You can sell the property and the revenue remains outside the marriage.

The advantage is that in the case of death or separation, you control the property.  The downside is that bringing this up to your spouse could certainly make for interesting dinner conversation. I rarely see this type of ownership when a young couple gets married and starts their life together. But if people get married later in life, and both spouses have more complicated and/or established financial pictures, sole and separate ownership can make sense.

If you have questions about real estate or property management, please contact me at or visit If you have questions about how you should hold title, call your attorney and/or accountant.

Have suggestions about what I should write? Let me know. If I use your suggestion in a column, I’ll send you’re a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at Dick Selzer is a real estate broker who has been in the business for more than 35 years.



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