Joint tenancy in Visual Studio .NET

Make QR Code JIS X 0510 in Visual Studio .NET Joint tenancy

Suppose that you and your spouse buy a house together as joint tenants When your spouse dies 20 years from now, ownership of the house automatically transfers to you without going through probate This feature of joint tenancy co-ownership is known as the right of survivorship Joint-tenancy benefits don t stop there You also get a stepped-up basis on your spouse s half of the house This stepped-up basis may save you big bucks on the capital-gains tax that you have to pay if you ever sell the house Here s how a stepped-up basis works Say that you and your spouse paid $180,000 for the house when you bought it Immediately after your spouse s death, the house is appraised at $300,000 Your new cost-of-the-home basis for tax purposes is $240,000 ($90,000 for your half-share of the original purchase price, plus $150,000 for your spouse s half of the house at date of death) because no capital-gains tax applies to your spouse s $60,000 of appreciation in value Even though we use a married couple in our example, you need not be married to use joint tenancy co-ownership However, a minimum of two people must co-own

Only married couples can take title as community property Compared with joint tenancy, an advantage of community property co-ownership is that both halves of your house get a stepped-up basis upon the death of your spouse This gives you even bigger tax savings Using the same figures as the joint-tenancy example, as the surviving spouse, your cost basis is the full $300,000 Capital-gains tax is forgiven on every penny of appreciation in value between the date of purchase and your spouse s death Another advantage of community property co-ownership is the ability to will your share of the house to whomever you wish Because of the right of survivorship, this choice isn t possible when title is held as joint tenants Six states Alaska, Arizona, California, Nevada, Texas, and Wisconsin allow community property with rights of survivorship This allows both the full step-up in basis of regular community property, plus the non-administration of estates afforded by joint tenancy ownership

Holding title as tenants-in-common or in the form of a partnership doesn t give you a stepped-up basis upon the death of a co-owner This creates an obvious disadvantage from a tax standpoint Offsetting legal advantages exist, however, for unrelated persons who take title either as tenants-in-common or as a partnership Under these forms of co-ownership, you generally have the right to will or sell your share of the property without permission of the co-owners Furthermore, co-owners don t have to have equal ownership interests in the property a nice feature for people who just want a small piece of the action

If you re smart and we know that you must be, or you wouldn t be reading this book you and your co-owners should have a formal written agreement, prepared by a real estate lawyer, to cover situations likely to arise while you jointly own the property (Note: Such agreements are generally used and advisable when partners purchasing a property aren t a married couple)

Here s a recap of key provisions to include in your written agreement (you can find more on these items in the partnership section of 8): Provisions to buy out a co-owner who has to sell when the other owners want to keep the property Provisions to prorate maintenance and repair costs among co-owners with unequal shares in the property Provisions to resolve disputes regarding such things as what color to paint the house Provisions for penalties if a co-owner can t cover his or her share of loan payments or property taxes The preceding information isn t intended to be your definitive guide to the subtleties of real property title vesting This chapter merely points out the most important issues that you should consider Don t make a decision of this magnitude in haste, especially if your situation is unusual or complicated In addition to deciding how to hold title, you should consider estate-planning issues, such as wills and potential trusts (see 2 to find out more)