what are tax consequence to my spouse and estate if I hold property title as sole and separate ownership in Arizona?

Asked by Rk, New York, NY Thu May 2, 2013

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Jennie Miller…, Agent, Phoenix, AZ
Fri May 3, 2013
You would want to talk to an accountant about this.
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BParker, CPA*, , Scottsdale, AZ
Thu May 2, 2013
Hi Rk:

Arizona is a Community Property state. We offer "Community Property with Right of Survivorship" (CPWROS). Compared to Sole and Separate or Joint Tenants, the tax benefit of CPWROS is you will get a full step-up in basis upon the death of the first spouse to pass. (For example: Have tax basis in property at time of death of $140,000; fair market value is $200,000; if not CPWROS the remaining spouse only gets a step-up to $170,000 (half of difference), but with CPWROS the new basis would be $200,000, thereby reducing the eventual taxable amount by $30,000 in this example.--Of course, this only really becomes important if you exceed the current exemption of $250,000 for a single person.)

There is also a legal benefit to CPWROS vs. Joint Tenancy, making it impossible for one spouse to transfer ownership without the other spouse's approval, but I will leave that to an attorney.
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