Property Ownership - Joint Tenancy?


The Primary Joint Tenancy Advantages.  To be legally correct, joint-tenancy real estate ownership means "joint tenancy with right of survivorship."  A few states require use of those exact words on the deed.  But in most states, "joint tenancy" is sufficient.

Survivorship means the joint tenant who outlives the joint tenant co-owner(s) automatically receives the deceased's share of the property without probate court costs or delays.  Probate court avoidance is considered the major joint-tenancy advantage.  All that is usually necessary to clear the title of a deceased joint tenant's name is to record a certified copy of the death certificate and an affidavit of survivorship with the local recorder of deeds.

The will of a deceased joint tenant has no effect on their joint-tenancy property.  However, joint tenants still need a written will.  In the event of simultaneous death of all the joint tenants, such as in a plane crash, the will of each deceased joint tenant determines who receives their share of the property.  Or, in the unlikely event one joint tenant kills another joint tenant, the wrongdoer cannot receive the deceased joint tenant's share by survivorship so the deceased joint tenant's will then becomes important.

Although joint tenancy usually involves two co-owners, such as husband and wife, there can be an unlimited number of joint tenants.  But they all must take title at the same time by the same deed, and they all own equal shares.

For example, suppose John and Mary Buyer purchase their home as joint tenants.  Each therefore owns a 50 percent share.  However, when their daughter, Suzy, becomes 18 they decide to add her as an additional joint tenant.

To add Suzy to the title, John and Mary sign and record a quitclaim deed from themselves to John, Mary and Suzy as joint tenants with right of survivorship.  The result is each of the three joint tenants now owns a one-third interest in the home.

Tenancy by the Entireties for Married Couples.  In 24 states, a husband and wife can hold title as tenants by the entireties, which is very similar to joint tenancy.  However, neither spouse can convey their tenancy by entirety share without the other spouse's signature.

This ownership form overcomes the joint-tenancy disadvantage that one joint tenant can transfer his/her share without approval of the other joint tenant(s), thus breaking up the joint tenancy and creating a tenancy in common.

Tenancy by the entireties for husband and wife is allowed in Alaska, Arkansas, Delaware, Florida, Hawaii, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Vermont, Virginia, Wyoming, and the District of Columbia.

Seven Pros and Cons of Joint Tenancy.  Before consulting your attorney or other trusted adviser to determine if joint tenancy with right of survivorship (JTWRS) is right for your situation, it pays to know the pros and cons:

1. A joint tenant’s will does not affect JTWRS property.  Except for joint-tenancy simultaneous death or murder situations, a written will has no effect on JTWRS property.  Especially in second marriages, where each spouse often wants to leave their half of the property to children of their first marriage, better alternatives might be holding title in a revocable living trust or as tenants in common.

2. Probate costs and delays are avoided.  When a joint tenant dies, his or her share automatically passes to the surviving joint tenant(s) without probate court interference.  This is considered the major joint-tenancy advantage


Tax deductions for home buyers


Write-offs to Remember
Deductions in the Loan Process

Write-offs are the government's way of rewarding taxpayers when they've done something the government likes. And to judge by the write-offs, the government likes it when people borrow money to buy a house. There are write-offs aplenty, many of which people often forget.

Make sure your clients take advantage of every break the IRS will give. Here are a few they tend to forget:

Points:
According to the IRS, origination fees charged as points must be paid for the use of money, (for example, to obtain a lower interest rate) in order to be tax deductible. Origination fees that constitute a "service fee" are not tax deductible. The question must be asked, "Does the fee apply to the use of money, or is it a service charge?"

Discount points are paid to secure a lower interest rate. IRS Publication 936 lists a general rule that states, "You generally cannot deduct the full amount of points in the year paid. Because they are prepaid interest, you generally must deduct them over the life (term) of the mortgage." However, there are conditions which, if met, make discount points tax deductible in the year they are paid. (For more details on points and deductions, see http://www.irs.gov/pu blications/p936/ar02.html#d0e942.)

Pre-payment penalties:
Unforeseen circumstances often cause borrowers to pull out of their mortgages sooner than expected. Fortunately, pre-payment penalties are tax deductible, which helps ease the pain.

Pro-rated real estate taxes:
Even if the seller sent the tax collector the check, chances are the buyer paid a pro-rated portion of the taxes for the year at closing. Be sure they know to deduct their fair share.

Pro-rated mortgage interest:
Depending on when in the month the home sale closes, buyers pay either a hefty or a tiny amount of pro-rated mortgage interest for that month. Big or small, they can write that off. The Final Closing/Settlement Statement will show just how much they're due.

Home construction loan interest:
As long as the construction period doesn't last more than two years before they make the new place their "principal residence," they can write off the interest for that construction loan.

It pays to pay attentionall these write-offs can add up to some serious savings when tax time comes around.