When purchasing a property, something to keep in the back of your mind is the difference between separate property and community property. This refers to the rights that the owner/owners have to the property and impacts how you and/or your spouse file taxes.
Separate property consists of any real or personal property that is acquired before marriage. While separate property can be acquired after marriage, it must be completely separate, such as a gift or inheritance given to specifically one spouse, real estate purchased with separate funds, or property that has been addressed in a prenuptial or postnuptial agreement. In order for separate property to remain separate, it must stay independent from any other assets.
There are currently 9 community property states – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In Idaho, community property means that property acquired after marriage is owned by both spouses. When a property is acquired after marriage, both spouses would be considered owners of that property, listed on the deed. This includes personal property such as cars, or retirement accounts, and real property, such as real estate or land. Community property, in terms of real property, can become separate property when one spouse deeds over their interest in the land to the other spouse.
Laws may vary by state. For more information on separate and community property, please contact an attorney.
