Many unwed couples want to buy a house together. If you’re one of them, you need to plan and research your options thoroughly prior to doing so. You need to consider both your credit scores, earning capacity, and the type of mortgage to choose, advises Altius Mortgage Group and other loan officers from Salt Lake City. How the property would be titled would affect how it could be transferred, not to mention the potential tax consequences.
Title Options for Unmarried Couples
Unwed couples could choose from sole ownership, joint tenants, or tenants in common.
- Titling your home as joint tenants would mean that both of you would own the house equally, with equal rights and responsibilities. If one of you passes away, the share of the deceased owner becomes the share of the surviving owner.
- You could also opt for the “tenants in common” title, which means that you and your unwed partner could choose the percentage or share of the property — 60% for you and 40% for your partner, or 30% for you and 70% for your partner, and so on. If one of you passes away, the ownership share would pass to whoever is indicated in the living trust or will. If there were no living trust or will, the intestate heirs or closest relatives would inherit the ownership interest under state intestacy laws.
- There are situations when it would be more practical for only one to own the property legally. Having only one owner could make sense in some instances, such as when one of you is shouldering the entire cost of the property or has a bad credit history. Take note, however, that if you also drop money for the home purchase but don’t have your name on the title, you can’t list the mortgage interest deduction on your tax return.
Take note that every state has its own regulations when it comes to titling property. During the planning stages, make sure to get help from an attorney to know about the state laws that could affect your purchase. Yes, buying a home could a great joy and investment, but you need to be careful and plan well before taking the plunge.