A: It often comes down to how title was held.
With joint tenancy, you only get a step-up in basis on your spouse’s half, while your half keeps its original basis, which can leave significant taxable gain when you sell. With community property with right of survivorship, both halves receive a full step-up to fair market value, often eliminating most or all capital gains.
If you own real estate with your spouse, it’s worth making sure your title is set up the right way now, not later. A simple change can mean the difference between a large tax bill and little to none, so check in with your estate planning attorney before it’s too late.
