Joint Tenancy, Community Property or a Trust: How Should You Hold Title to a California Home?

What are the ways to hold title to a California home?

When you buy, escrow asks how you will take title, and the words you choose go on the deed. I can't choose for you, and neither can escrow: it is a legal and tax decision. What I can do is show what each choice does, so you walk into that conversation with the right questions.

California law recognizes the forms below (Civil Code §682). When a deed to two or more people names none of them, the law treats the owners as tenants in common (Civil Code §686).

Why can community property save a surviving spouse capital gains tax?

Capital gains tax is measured from your basis: what you paid, plus improvements. When an owner dies, the basis of what they owned generally resets to its market value on the date of death (Internal Revenue Code §1014; IRS Publication 551). A reset can erase decades of gain.

For community property, the reset covers both halves of the home, as long as at least half was included in the estate of the spouse who died (§1014(b)(6); IRS Publication 555). For spouses who hold as joint tenants, the IRS counts only half of the home in the first spouse's estate, so generally only that half resets (Publication 551, "qualified joint interest").

Here is what that difference can look like. These amounts are invented for arithmetic only, prepared November 2, 2026. A couple paid $600,000 in 2005. The home is worth $1,800,000 when the first spouse dies, and the survivor sells it for that amount.

What should a surviving spouse check before counting on the reset?

The home-sale exclusion lets you leave out up to $250,000 of gain, or $500,000 for a married couple, when you owned the home and lived in it for 2 of the 5 years before the sale (IRS Publication 523). A surviving spouse who has not remarried can still use $500,000 if the sale closes within 2 years of the death and the couple would have qualified just before it (§121(b)(4)).

Check these with a CPA before relying on the table above:

• Community property with right of survivorship adds the automatic transfer to the survivor. No IRS ruling addresses whether California's version gets the full reset, so confirm it before counting on one.
• If your deed says joint tenancy but you bought the home with money earned during the marriage, ask whether it can be treated as community property. The answer depends on your records.
• The reset works both ways. If the home is worth less than you paid, the basis resets down.
• Registered domestic partners: the IRS says this community property rule does not apply to you (Publication 555).

What happens if parents add a child to the deed?

Families often ask about this. Adding a child changes three things at once: it is a gift, it changes the child's tax basis, and it changes when the county reassesses.

It is a gift. The IRS defines a gift as a transfer where full payment is not received in return, so a child added to the deed for nothing has received a gift of that share. In 2026, gifts of more than $19,000 to one person in a year require a federal gift tax return, Form 709. Gift tax is owed only after the giver's lifetime taxable gifts use up the basic exclusion: $15,000,000 per person in 2026 (Public Law 119-21).

The child keeps your old basis. A gift carries the giver's basis with it (Internal Revenue Code §1015), while inherited property generally resets at death (§1014). These amounts are invented for arithmetic only: a parent paid $250,000 in 1995, and the home is worth $1,600,000 today and at the parent's death.

Does adding a child to the deed avoid a property tax reassessment?

No. It delays it. When a parent adds a child as a joint tenant and stays on title, the county does not reassess at that moment (Revenue and Taxation Code §65(b)). When the last of the original owners dies, the county reassesses the property those owners held, including the share the child received years earlier (§65(c)), unless an exclusion applies. Deeding the home outright to a child is a change in ownership right away.

Prop 19's parent-child exclusion is the main way to keep the old taxable value. The home has to be the parent's principal residence and become the child's, and the old value carries over only up to a cap: that value plus $1,044,586, for transfers from February 16, 2025 to February 15, 2027 (State Board of Equalization). My Prop 19 guide, linked below, walks through the rest.

The child also becomes an owner. Before adding anyone, ask an attorney whose signature a later sale or refinance will need, and whether the child's own debts or divorce could reach the home.

Does a living trust change your property tax or income tax?

Not while you are alive. Moving your home into your own revocable living trust is not a change in ownership, so the county does not reassess it (Revenue and Taxation Code §62(d)). For income tax, the IRS still treats you as the owner, so the home-sale exclusion works the same way (Treasury Regulation §1.121-1(c)(3)(i)). A home in a trust you can revoke still gets the basis reset at your death (Internal Revenue Code §1014(b)(2)).

The trust does not stop reassessment at death. When a revocable trust becomes irrevocable, the property that goes to anyone other than you or your spouse is a change in ownership (§61(h)). A child who inherits through a trust still needs Prop 19 to keep the old taxable value.

Moving a home into a trust raises two practical questions. Your loan: federal law bars a lender from calling a loan due because you moved a home of one to four units into a living trust in which you remain a beneficiary (12 U.S.C. §1701j-3(d)(8)). Transfer tax: the county documentary transfer tax does not apply to a gift (Revenue and Taxation Code §11930), but city transfer taxes, such as Oakland's and Berkeley's, have their own rules, so ask escrow or the title company about your city.

How much can a living trust save in probate fees?

If a home goes through probate, California sets the executor's fee and the attorney's fee by formula on the estate's gross value, with no deduction for the mortgage (Probate Code §10800, §10810): 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000 and 1% of the next $9,000,000.

A trust avoids these fees only for property it actually holds, so the deed has to put the home in the trust. For deaths from April 1, 2025 through March 31, 2028, a primary residence worth $750,000 or less can pass by a shorter court petition instead of full probate (Probate Code §13151, §13152).

Should you put the home you live in into an LLC?

For a home you live in, the LLC question is mostly about what you give up. An LLC is a separate owner. Deeding a home to one is a change in ownership unless every owner keeps exactly the same share (Revenue and Taxation Code §62(a)(2)). After that, once the original owners transfer more than 50% of the LLC's interests, counted together over time, the county reassesses the home (§64(d)).

The federal rule that protects your loan when the home moves into a living trust does not list transfers to an LLC (12 U.S.C. §1701j-3(d)). Ask a CPA and an attorney before deeding a home you live in to an LLC.

What should you ask before you sign a deed?

• Married? Ask a CPA how community property, community property with right of survivorship and joint tenancy would each be taxed when the first of you dies.
• Switching forms between spouses, for example from joint tenancy to community property? A transfer between spouses is not reassessed (Revenue and Taxation Code §63). Ask an attorney to prepare the deed.
• Thinking of adding a child? Ask about the gift tax return, the child's basis, and the reassessment when you die, before anything is recorded.
• Want to avoid probate? Ask an estate planning attorney whether a living trust fits, then confirm the deed actually put the home in the trust.
• Recording any new deed? File a Preliminary Change of Ownership Report (form BOE-502-A) with it. Without one, the recorder may charge an extra $20 (Revenue and Taxation Code §480.3).
• Keep your purchase papers and improvement receipts. They are where your basis starts.

The short version

How you hold title is a tax decision as much as a legal one. Married couples should understand the basis reset before choosing joint tenancy. Parents should run the numbers before adding a child to the deed. A living trust mostly saves probate, not property tax.

Source review: November 2, 2026. This is general education, not legal or tax advice. Confirm your situation with a CPA and a California estate planning attorney before you change a deed.

Real estate agent | DRE 02236890 | Real Brokerage Technologies.