Sometimes the way to the American Dream of home ownership is through unconventional circumstances. For example, you may enter into a partnership on a house purchase without the legal rights of marriage. What considerations do you have to watch out for in such an arrangement? How can you assure your rights of ownership in case of problematic situations like death or break-up? Here is an examination of the home partnership quandary…
Couples and partners who are unmarried (either by choice or law) face many tax complications when applying for joint home ownership. In the event of break-up, for example, married couples who are divorcing can transfer ownership of a house without tax penalties. But unmarried partners, if a split occurs, might face excise or gift taxes when transferring ownership.
Besides communicating succinctly on shared financial accounts and funds, unmarried couples can draw up a “Cohabitation Agreement,” which is essentially a legal documentation of all assets (including the house) and instructions for the maintenance of same. Establishing and authorizing a durable power of attorney is another option, and can allow a partner to access accounts and pay off bills if his or her partner is incapacitated.
A Will, A Way
Drawing up a will offers the best protection in the partnership scenario for home owners. Distinct guidelines for transfer of the home in case of death of one or the other can put a calm against the potential for any other claims among heirs.
Of course, this is a cursory glance into the aspects of home partnerships. For more information, consult a real estate professional, attorney or tax consultant.