Community property is a legal rule used in some U.S. states that treats most assets and debts acquired during a marriage as owned equally (50/50) by both spouses. In real estate terms, a home bought during the marriage is usually considered community property even if only one spouse’s name is on the deed. The rule affects buying, selling, refinancing, divorce division, creditor claims, and what happens when a spouse dies.
Separate property is what a spouse owned before marriage, or what they receive during marriage by gift or inheritance, or what is acquired after legal separation. Unlike separate property, community property is acquired during the marriage and presumed owned by both spouses. (If you want a deeper definition of separate property, see separate property.)
Couples who live or plan to live in community property states should understand how a house, savings, and retirement contributions will be classified so they can plan purchases, titles, and estate documents appropriately.
If you’re separating or divorcing in a community property state, expect most marital assets and debts acquired during the marriage to be split as community property—often 50/50—unless there’s a valid exception or agreement.
Buyers and sellers need to know how title, deed language, and timing affect ownership. People moving into a community property state should review whether their pre‑marriage assets or out‑of‑state property will be treated differently.
Community property changes how an estate is administered, who inherits automatically, and what tax advantages (like basis step‑up) may apply—critical for wills, trusts, and probate planning.
Lenders, title companies, agents, and CPAs must verify spousal signatures, resolve title claims, and account for community interests when closing transactions or valuing property.
As of this writing the nine U.S. community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. If you live in or move to one of these states, community property rules usually apply.
Some states allow spouses to hold property as “community property with right of survivorship” (CPWROS). That title form combines community ownership with an automatic transfer of a deceased spouse’s half to the survivor—reducing the need for probate. California, Texas, and several others recognize this form; availability varies by state and specific deed wording.
A few states have nuances: Wisconsin applies community‑property concepts in some cases; some states permit couples to opt into community property treatment for tax reasons; and Louisiana follows a civil‑law regime with its own marital property regimes. Always check local statutes or consult counsel.
When spouses move between community and separate property states, courts typically apply conflict‑of‑laws rules. Property acquired while living in a community property state is usually still treated as community property, but how it’s recognized can depend on timing, domicile, and specific state law. Consult an attorney when relocating across state lines.
Presumption: a home bought during marriage is community property. Exceptions include clear written agreements (prenup/postnup), a recorded deed designating separate ownership, or proof the funds came from separate property.
Property owned before marriage generally remains separate. But if marital funds pay mortgage or improvements, the separate property owner may still see community claims to increased equity. Documentation and tracing are key to preserving separateness.
Gifts and inheritances to one spouse during marriage are usually separate property, provided the recipient can show the asset was intended as separate and wasn’t commingled into marital accounts or titles.
Income generated from separate property (rent, dividends) may be treated as community property in many states unless properly segregated. Appreciation can be community if caused by marital efforts or community funds; passive market appreciation is more likely to remain separate—again, subject to tracing rules.
Commingling occurs when separate funds are mixed with marital funds (e.g., depositing an inheritance into a joint bank account used for household expenses). Transmutation is a formal change in ownership (e.g., retitling a separately owned house into joint names). Either can convert separate property into community property unless careful records or agreements prove otherwise.
Tracing is the process of documenting where purchase funds, mortgage payments, and improvements came from. Bank records, closing statements, gift letters, and loan documents are typical evidence used to show whether funds were separate or community.
Tenancy by the entirety (available in some states) is a special form of ownership for married couples that provides creditor protections and survivorship rights. Joint tenancy offers survivorship but not the same creditor protection. Community property conveys equal ownership and—if designated with right of survivorship—can avoid probate for the deceased spouse’s half.
Community property with right of survivorship ensures the surviving spouse automatically receives the decedent’s share without probate, and often enables a favorable tax basis adjustment on the entire property.
The deed language you choose at purchase—“husband and wife as community property,” “community property with right of survivorship,” “joint tenants,” etc.—has major legal consequences. Always confirm the exact wording with your title company or attorney at closing.
In community property states, usually no: both spouses typically must sign deeds, mortgage documents, and loan modifications because both have ownership interests. Exceptions exist only with specific powers of attorney or court orders.
Lenders and title companies will look for spousal signatures, joinder forms, and marital status affidavits. They may require a deed of reconveyance, community property deed form, or proof of consent before funding or insuring title.
To change ownership, spouses commonly use quitclaim deeds, community property deeds, or survivorship deeds. Clearing title may require releases from both spouses or documented proof that an interest is separate (e.g., prenup, trust). Title companies often demand lien releases and marital status affidavits.
Community property states generally divide community assets equally (50/50). That’s different from equitable distribution states where courts divide marital property fairly but not necessarily equally.
Courts identify community assets, appraise or value them, subtract community debts, and then divide the net value—often by awarding physical property to one spouse and offsetting with cash or other assets. Valuation disputes commonly arise over real estate, businesses, and pensions.
Mortgage debt on a community home is typically community debt. Even if one spouse keeps the house, the mortgage lender remains free to pursue both spouses if both signed. Removing a spouse from a loan requires lender approval and refinance in most cases.
Common strategies include prenuptial/postnuptial agreements, buyouts where one spouse purchases the other’s share, mediated property settlements, or transfers into trusts. Clear documentation and timely appraisals simplify settlements.
In many community property states the surviving spouse automatically owns the deceased spouse’s community half. If the deceased spousal half is separate property, the decedent’s will or state intestacy laws determine distribution.
CPWROS can transfer property directly to the surviving spouse, avoiding probate. Without survivorship language, the decedent’s share may pass under a will or through intestacy and could require probate administration.
Community property simplifies estate settlement for spouses but can reduce the decedent’s ability to leave their 50% share to non‑spousal heirs. Estate planning tools like trusts can help balance survivorship and testamentary goals.
Most debts incurred during marriage are community debts and can be satisfied from community property. Creditors of one spouse may reach community assets in many states.
Separate property is generally shielded from creditors who only have claims against one spouse’s separate activities, but creditors with community claims may still attach community assets. State law and case facts determine outcomes.
Title searches should show recorded liens, judgments, and marital status. Clearing title may require lien releases, spouse joinders, or court orders. Always confirm all recorded encumbrances before closing.
One major tax advantage in community property states: when one spouse dies, the entire community property often receives a step‑up in basis to fair market value (not just the decedent’s half), which can reduce capital gains tax if the property is later sold. Rules vary by state and depend on holding form.
Married couples filing jointly can exclude up to $500,000 of capital gains on a primary residence if they meet ownership and use tests. Community property classification affects who owned the property and for how long—important for meeting those tests.
Keep meticulous records: purchase documents, improvements, mortgage interest paid, and tracing evidence. These records matter for basis, exclusions, and defending separate vs community claims.
Prenups and postnups can define property as separate or community and set rules for division—powerful tools for overriding default state rules when properly executed.
You can change title forms using deeds that name the ownership type. To create survivorship or change classification, use the exact statutory deed language required in your state and record it properly.
Keep separate bank accounts for separate funds, use gift letters, and retain closing statements to trace funds. The clearer the separation, the easier it is to prove separate ownership later.
Converting typically requires recorded deeds or written agreements. Conversion can have tax and estate consequences and should be done with legal counsel.
These documents show source of funds and payments. Lenders’ HUD‑1 or closing disclosure statements are especially important in tracing equity contributions.
Gift letters and trust documents prove intent to keep assets separate. Wills and probate records can show that property was meant to pass as separate property.
When tracing is complex, attorneys use forensic accountants, appraisers, and expert witnesses to reconstruct financial flows and establish whether property remained separate.
Usually yes in community property states—unless it’s clearly paid for with separate funds, protected by an agreement, or otherwise documented as separate.
Often yes if the cash came from marital earnings. If the cash was separate (e.g., pre‑marriage savings or an inheritance) and properly traced, it may remain separate.
No—gifts and inheritances to one spouse are typically separate property unless the recipient commingles them into marital assets or transmits ownership to the community.
In community property states, division is generally equal for community assets, but settlements can vary by agreement or if separate property complicates valuations.
It depends on state recognition of the relationship. Same‑sex marriages are recognized federally and in most states; domestic partnerships or civil unions may be treated differently—check local law.
Yes—creditors for community debts can often reach community property. Creditors solely of one spouse may still access community assets depending on state law.
Ana and Marcus marry in California. Ana owned a condo before marriage (separate). During marriage they buy a family home with a down payment from joint earnings. Marcus later refinances the home but uses community income to pay the mortgage. They divorce. The home is community property due to purchase during marriage and community payments. Ana may retain her pre‑marriage condo as separate—but equity built with community funds could create community claims. If Marcus tries to keep the home, he may need to buy out Ana’s 50% or the court may divide assets to equalize the parties.
1) Identify timing of acquisition (during marriage → community). 2) Trace funds (separate down payment vs community mortgage payments). 3) Determine title form and deed language. 4) Value property and account for debts. 5) Negotiate buyout or let court divide (often 50/50 for community assets).
Keep records of pre‑marriage assets, avoid commingling inheritances, consider a buyout or mediated settlement, and consult a family law attorney and CPA before big transactions.
Contact an attorney for divorce, complex title disputes, moving between states, probate concerns, or when drafting marital agreements or community property deeds.
Use CPAs for tax consequences and basis tracing, title officers to resolve deed/closing issues, and forensic accountants when tracing commingled funds or valuing complex assets.
Bring deeds, closing disclosures, mortgage statements, bank records, prenups/postnups, gift letters, wills/trusts, and any correspondence related to title or liens.
Deeds, closing statements (HUD‑1/Closing Disclosure), bank records showing source of funds, mortgage payoff statements, gift/inheritance documentation, and any marital agreements.
Decide title language with your attorney/title company, consider a prenuptial/postnuptial agreement, document all fund sources, and ask lenders about spousal signature requirements.
Freeze unnecessary transfers, preserve records, consult counsel quickly, notify title/insurance as needed, and discuss temporary orders or probate steps with an attorney.
Search your state’s government or legislature site for “[State] community property statute” or consult your state bar association’s family law resources for statutes and guidance.
Templates and sample deeds vary by state—work with an attorney or your title company to obtain legally valid forms tailored to your jurisdiction.
Look for state bar publications on marital property, reputable family law treatises, and directories for certified family law attorneys and forensic accountants in your state.
Community property means most assets and debts acquired during marriage are jointly owned. Whether a home is community or separate depends on timing, funds used, deed language, and local law. If you live in or plan to move to a community property state, keep meticulous records, choose title language carefully, and consult legal and tax professionals before major transactions, divorce, or estate planning.
