Top 10 Reasons Unmarried Partners Should Own Property as Joint Tenants

Purchasing a home is a common rite of passage for married couples, or at least it's a financial goal. But unmarried partners, perhaps concerned about the long-term risks of a 30-year mortgage, typically stick to the rental market. After all, rentals are easier to walk away from since there's no equity to be recovered at the end of a lease period.

Below, FindLaw shares 10 benefits of unmarried partners owning property as joint tenants.

10. Joint Tenancy Is Simple

Joint tenancy is easy to achieve. Joint tenancy is a straightforward way for domestic partners to own property together. You can do this by including a clause referring to that form of ownership in the title to the property.

When you buy a home together, both your names are on the deed as co-owners. This gives each partner with legal property rights. It's always recommended to get legal advice to understand any potential legal issues.

9. Shows Commitment to Your Relationship

Purchasing real estate together is a big step that shows commitment to one another. It's a decision that should involve serious discussions and a clear understanding of each other's finances.

These discussions should also cover your long-term goals, expectations, and how you envision your future together. Both partners should have a clear understanding of each other's financial situations, including income, debts, credit history, and spending habits. This transparency helps set a solid foundation for managing joint finances effectively.

Further, buying a home together can foster teamwork as you navigate the real estate market, make decisions on the type of property that suits both your needs, and agree on the location that aligns with your lifestyle. This process encourages both collaboration and compromise.

8. It Can Provide Financial Security

Becoming joint tenants (or homeowners in general) usually makes more long-term financial sense than paying rent year after year. Homeownership is an investment that can provide financial security for both partners and even partially fund your retirement.

As joint tenants, both partners can tap into the equity in the home in case you need money in the future. This can be especially important in the event of a breakup.

7. It Has Tax Benefits

Homeownership can provide significant tax benefits to the couple. These benefits can be more complicated when the couple is unmarried. A married couple that owns a home can take the mortgage and property tax deductions on their joint tax return.

An unmarried couple cannot file a joint return and will have to figure out how to divide those tax benefits. If it makes more economic sense for one party to claim the deductions, the other should be compensated in some other way, such as by being responsible for fewer household expenses.

6. It Prevents Gift Taxes

If only one member of an unmarried couple owns the home and lets the other party live there rent-free, the IRS may consider that arrangement a gift to the nonpaying partner. If that gift is worth more than $19,000 a year, or the equivalent of about $1,583 rent per month, the giver-or the homeowner-will have to pay gift taxes.

You can avoid this gift tax complication if the homeowner charges the other partner rent and keeps accurate books and records.

5. It’s a Shared Asset

In a joint tenancy, the property is a shared asset. This means any increase in the property's value belongs to both partners equally. Equal ownership of assets can create a balance of power in the relationship. It's like a joint bank account but for your house.

In the event of a sale or a refinance, both partners benefit equally from any financial gains. Additionally, joint tenancy can include a right of survivorship, meaning that if one partner passes away, the surviving partner automatically inherits the other's share.

4. It Creates a Shared Debt for Borrowers

As joint tenants, you are most likely also joint debtors. If both partners are named on the mortgage note, neither is saddled alone with the corresponding debt, and they both share equally in this financial burden. This is important to consider when talking with your lender.

Additionally, the way joint tenants manage this debt can impact each partner's credit score. Timely payments can positively influence both credit scores, while missed payments may negatively affect them. It’s crucial to maintain open communication and a clear financial plan to ensure both partners protect their creditworthiness.

3. It Provides Proof of Ownership

If the relationship does not last, each party has sound legal proof of their entitlement to an equal share of the property. In a joint tenancy, each partner's name is on the title. This provides clear proof of ownership and can help prevent misunderstandings or disputes over who owns what.

You can also draft a cohabitation agreement to further safeguard your stake in the property. A cohabitation agreement is like a prenuptial agreement, but designed for unmarried couples who may acquire wealth, debt, and property together. A qualified attorney can help with this contract.

2. It Brings Combined Financial Strength

By combining their incomes, unmarried partners often qualify for a larger mortgage than they could individually. This increased purchasing power can enable couples to:

• Buy in more expensive neighborhoods
• Access larger or updated homes
• Purchase new construction
• Invest in properties with greater potential for appreciation

Joint tenancy can also be beneficial when one partner has a less favorable debt-to-income ratio or credit score. The stronger financial profile of the other partner can help balance this out. Applying for financing together can help them qualify for a mortgage that may be out of reach for the partner with the weaker financial position on their own.

By applying together, joint tenants can leverage one partner's more favorable credit history and income to secure a home loan with better terms and interest rates.

1. It May Include Right of Survivorship

When a property is titled as joint tenants with right of survivorship (this type of ownership must be specified on the deed or the joint owners will likely be considered tenants in common), when one joint tenant dies, the title to the property automatically passes to the other without the need to go through the formal probate process.

If only one member of an unmarried couple holds title to the property and does not have a will granting the property to the other party, it would pass to the deceased's legal heirs (usually family members), despite any contrary intentions on the part of the couple.

With property held by deed as a joint tenancy with the right of survivorship, the surviving partner automatically inherits the other's share of the property. This can offer significant protection and peace of mind.

Contact an Attorney About Your Home Purchase as an Unmarried Couple

Buying a house together has benefits for unmarried partners. But, there are important factors to consider before making this decision. Learn more about joint tenancy and whether it would work for you by speaking with an attorney.

It's crucial to get legal advice to ensure you fully understand your legal rights and available legal protections. Lawyers can help homebuyers with estate planning or a cohabitation property agreement. They can help with any written agreement with your significant other.

Speak with a qualified family law attorney in your area today.