Another Way to Take Title: Community Property and Tenancy by the Entireties - dummies

Another Way to Take Title: Community Property and Tenancy by the Entireties

By Eric Tyson, Robert S. Griswold

Copyright © 2015 Eric Tyson and Robert S. Griswold. All rights reserved.

Some states offer married couples an additional way to take title. The main advantage with community property is that both halves of your rental property receive a stepped-up basis upon the death of one spouse. Also, because each community property spouse owns 50 percent of the asset, he or she has the right to transfer his or her interest by will or otherwise to whomever they want.

Community property is available in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska allows an opt-in for community property arrangement whereas several of these states (Alaska, Arizona, California, Idaho, Nevada, and Wisconsin) are now offering a modified form called community property with right of survivorship, which adds the benefit of avoiding probate upon the death of a spouse.

The late real estate columnist Bob Bruss wrote about the benefits of another form of ownership that applies only to married couples — tenancy by the entireties. It’s essentially the same as joint tenancy with rights of survivorship but can’t be terminated by one spouse alone and isn’t subject to a partition action. Tenancy by the entireties must be specified on the deed and is only allowed in Alaska, Arkansas, Delaware, District of Columbia, Florida, Hawaii, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, and Wyoming. Be sure to check with your legal or tax advisor because there are some limitations, such as Ohio no longer allows tenancy by the entireties, and several states have specific requirements.