Dear Clients and Friends,
Married couples who own property in California should take title as Community Property (not as joint tenants).
Why community property? If married couples hold property as joint tenants, they only get a step-up in basis* (see definition below) in their half of the property when the other spouse passes away. If a married couple holds property as Community Property, 100% of it gets a step-up in basis when one spouse dies.
For example: Spouse A dies and the surviving spouse B, wants to down size and use the proceeds from the sale of the house for living expenses. If the property is owned as community property and sold right after A’s death there will be no capital gains taxes owed. This can amount to hundreds of thousands of dollars in tax savings and more money for B and/or B’s heirs and beneficiaries.
As a former Attorney with the IRS, I was specially assigned to the estate and gift tax division. This, along with my being a California Licensed Real Estate Broker and an experienced real estate and tax-collection-defense attorney, gives me a unique expertise in this area. I invite to you call me for a free phone evaluation of any legal problem you or those you know, may have to see if we can be of help.
*Basis is the amount of one’s capital investment in a property. With a step-up in basis the IRS will value a property at the time of inheritance rather than at the decedent’s date of purchase – as would be the case if a property were to be transfered during one’s life.