I am in California, a community property state, though our primary residence is registered as Joint Tenant.
Owning it as Joint Tenant means that if one of us dies, half of the cost base of the house has a 'step up' increase; whereas owning it as Community property will have a 'step up' for all of the cost base. That might give us an impression that there is a benefit of changing it to Community Property.
Since our capital gain is 300K today if we sell it. If we change it to Community Property and one of us dies, the capital gain will be $0. If we leave it as Joint Tenant, and one of us dies, half of the cost base step-up will leave the surviving spouse 150K capital gain, which is less than the home sale tax exclusion 250K. Therefore still no tax.
Looks like no benefit to change it, right?
Owning it as Joint Tenant means that if one of us dies, half of the cost base of the house has a 'step up' increase; whereas owning it as Community property will have a 'step up' for all of the cost base. That might give us an impression that there is a benefit of changing it to Community Property.
Since our capital gain is 300K today if we sell it. If we change it to Community Property and one of us dies, the capital gain will be $0. If we leave it as Joint Tenant, and one of us dies, half of the cost base step-up will leave the surviving spouse 150K capital gain, which is less than the home sale tax exclusion 250K. Therefore still no tax.
Looks like no benefit to change it, right?