How is Community Property With Right of Survivorship Different From Joint Tenancy?
With joint tenancy, the half interest owned by the decedent does not get the “stepped-up tax basis” (the “step up” is a fair market valuation of the property made as of the date of death. The “step-up” is automatic and unlimited, except in year 2010). Thus, the decedent’s 50% interest retains its old, low basis and the person or persons receiving the property may have to pay capital gains taxes if the house has appreciated in value and it is later sold. With the new form of property ownership, the property receives the stepped up basis.
