Joint tenancy is often a good idea for partners who are unmarried. It’s simple to do. In a property title, you just have a clause included that says that the form of ownership is a joint tenancy. Home ownership is obviously an investment. It can provide greater financial stability and opportunity for both partners. As joint tenants, either person could tap into the home’s equity as needed. Plus, it offers significant tax benefits.
Although the tax situation can be a little more complex when the domestic partners aren’t married, since they can’t file a joint return. Instead they will have to figure out a way to divide tax benefits. Often it makes more sense for one party to claim the deductions. Unmarried partners are generally able to figure out how to make it work best for them financially.
One reason why it’s beneficial to be joint tenants is that sometimes, the IRS sees the idea of a non-owner living in a home rent-free as a “gift.” Then, if the gift has a value greater than about $830 a month, the homeowner may end up being forced to pay gift taxes! When you purchase as joint tenants, you share the home’s ownership. It helps create a balance of power in the relationship.
Lastly, if the relationship doesn’t last, having joint tenancy can ensure that both parties are protected. Along the same lines, if one of the partner’s dies, it ensures that the home stays with the surviving partner. Otherwise, the home could end up in probate and the survivor losing their home to the decedents closest heir. Imagine being in an unmarried partnership for decades, then losing your partner and finally losing your home to your partner’s cousin!
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