Unknown to many, there are several kinds of homeownership and the type you choose can affect your quality of life. For example, unforeseen problems with the way you titled property may arise, which may cause conflict within your family. Or you may lose or gain tax benefits depending on your property title.
These types of ownership not only affect your personal property but also include other real estate properties. Learn what these types are.
Sole Ownership
This type of ownership has just one individual recognized in the eyes of the law as the owner of the property. Ownership can be transferred from one person to another through the execution of documents such as a deed of sale, or, where applicable, by state laws governing succession.
With sole ownership, the owner can sell, give, or donate the asset or property without worries of a claim. If the person passes away, their property or asset interest is included in the estate. The beneficiary of this property will be granted an increase in basis value, which means no capital gain will need to be considered should the beneficiary decide to sell the asset or property.
Joint Tenancy
In joint tenancy, two people or more share ownership of a property or asset through equal, undivided portions. This variant of ownership can be owned by individuals regardless of what their relationship is.
The owner’s heirs cannot be recipients of joint property interest. Instead, the ownership stake will automatically go to the owner who remains alive.
Joint Tenancy With Rights of Survivorship
This form of ownership is similar to joint tenancy, but the major difference is the owner can transfer an ownership stake to another while still alive. All of the owners have equal rights to the property and can do things without needing to inform the other owners.
However, if an owner passes, the surviving owners will get an increase in their share of the property. Note that this only applies relative to the stake of the owner who passed on. Ownership is also passed on to the surviving owners.
Tenancy in Common
Also called TIC, a tenancy in common means each individual or “tenant in common” gets ownership to a specific percentage of the property. This means that they can do whatever they want with a property in TIC, be it mortgaging it, selling it, or withdrawing from it. When an owner dies, their share is passed on to their beneficiaries and not to the surviving tenants in common.
Community Property
In this condition, assets or property obtained during marriage are owned by either spouse individually but are instead part of that marriage’s ‘community’. Colloquially referred to as conjugal property, this agreement means each spouse gets equal share and can choose to leave their share to a designated heir upon death. Each spouse can do with their property as they wish, including donating or passing off their share.
It’s important to think ahead and decide the ownership of your future home. Consider your current status and if you have a family to bequeath property to. If in doubt, consult a professional to help you create a plan that fits your needs.
