When you buy real estate, you will need to decide how you are going to hold title to the property. 

How you hold title to your home has many tax and legal implications and is something that you should give a lot of thought to and possibly consult with your tax advisor.

The most common ways of taking title to your home in California are: 

• sole owner
• community property
• community property with rights of survivorship
• tenants in common
• joint tenants

In California, the majority of single people hold title as sole owners and the majority of married couples hold title as community property with right of survivorship. 


1.  Sole Ownership.

Being a sole owner is when you take title as just one individual.  This is almost always done when a single person buys a property, but can also occur when one of the married spouses signs a quitclaim deed and transfers ownership to the other spouse.  There are no special tax advantages to holding title in sole ownership. When the sole owner dies, the property is subject to probate court costs and delays.


2.  Community Property

This option is available only to those who are married.  Under community property rules each spouse owns half of the property.
The death of one of the spouses with Community Property requires probate court, resulting in delays in the heirs getting access to the property and the costs involved with probate.


3.  Community Property with Right of Survivorship

Community Property with Right of Survivorship seems to be the most popular form of taking title.  This form combines the stepped up basis advantages of Community Property but avoids probate.  This is generally the preferred way of married couples taking title in California unless they have a living trust.  If you are married, then you can probably stop reading for this form of taking title has the greatest tax advantages.


4.  Tenants in Common

This method of holding title is used when two or more people who are not married take title to a piece of property. This is a common method of holding title when the individuals are not married.  Tenants in common own a specified interest in the property. The interest can be unequal. For example, two people, or entities, could own a piece of property with one owning 70% and the other owning 30% each.  The percentage that is owned by each party is specified on the deed.  The major advantage of this form of ownership is that each owner can sell or will his interest to whomever he or she wishes. This is a popular way to hold title in second marriages where each spouse wants to will his or her share to the children from the first marriage.

The disadvantages of tenancy in common begin with the property being subject to probate court costs and delays. Another disadvantage is that the remaining tenant(s) after another tenant’s death could end up owning property with a stranger.  A further disadvantage is that a tenant in common can bring a partition lawsuit to force the sale of the property.


5.  Joint Tenancy with Right of Survivorship

This form of title has some special conditions. First, all co-owners must take title at the same time. Second, all co-owners must have equal shares. The surviving co-owner(s) winds up owning the entire property.  After a joint tenant dies, the surviving joint tenant(s) receives the deceased's share. The deceased's will has no effect on joint tenancy property.

 The big advantage to this is that the property does not go through probate, thereby avoiding cost and delays. To clear the title usually involves recording an affidavit of survivorship and a certified copy of the death certificate.  Community property with right of survivorship  is generally viewed as the superior way to hold title as opposed to Joint Tenancy.