How you take title in your new home is key decision.
Unfortunately, in the euphoria of the moment, many new
homeowners don't put much thought into it.
Title
When purchasing a new home, you become the title owner of
record. Essentially, this means you are listed in public records
as the legal owner. This may sound like a simple concept, but
how you're classified as an owner can impact legal and tax
issues. Here are some issues to consider when taking title.
Single Owner
If you are purchasing the property on your own, there is really
only one title choice. Yep, you are going to be listed as the
sole owner, to wit, in your own name. If you are investing in
rental or commercial properties, you should speak with a lawyer
about purchasing the properties through a limited liability
company to limit potential liabilities.
Two or More Owners
If you're married, many states require you to take title in a
property as community property. In such states, you and a spouse
are automatically considered to be joint owners regardless of
any other factors. Community property title can have tremendous
but macabre tax benefits. If one spouse dies, the living spouse
gets a "step up" basis for tax consequence and huge capital
gains taxes. For instance, if you purchased a home for $200,000
and it is worth $400,000 when a spouse dies, the remaining
spouse gets to figure any capital gains using $400,000 as the
cost of the house instead of $200,000.
Joint Tenancy
In some states, spouses are not required to take community
property title. Instead, they and any collection of two or more
owners may take title in joint tenancy. The advantages of joint
tenancy are twofold. First, you get the step up basis mentioned
above. Second, title in the property automatically transfers to
surviving owners upon the death of one owner. This means you get
to avoid probate, an expensive and lengthy court process.
Taking Title
When buying a home, don't just pick title willy- nilly. Take the
time to explore the options in your state and pick the best one
for you.
More Information:Visit
http://www.fsboamerica.org/ for more details.
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