Property OwnershipIntermediateCalifornia Exam

In California, when a married couple acquires real property during marriage with community funds and takes title as 'community property with right of survivorship,' what is the primary advantage over joint tenancy?

AIt avoids all property taxes, per standard California real property conventions

BIt provides a full stepped-up tax basis for the surviving spouseCorrect

CIt allows unequal ownership shares, under standard California property ownership law

DIt eliminates the need for a deed, as typically recorded in a California deed

Why It provides a full stepped-up tax basis for the surviving spouse Is Correct

Answer B: It provides a full stepped-up tax basis for the surviving spouse

Community property with right of survivorship combines the survivorship feature of joint tenancy with the full stepped-up tax basis of community property. Upon death, the surviving spouse receives a full step-up in basis on the entire property (not just half), potentially reducing capital gains taxes on a future sale.

Exam Tip: Property Ownership

Property ownership questions test the bundle of rights and different forms of ownership. Know the differences between joint tenancy, tenancy in common, and community property, including the right of survivorship.

Key Property Ownership Terms in This Question

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Joint Tenancy

Co-ownership where two or more people hold equal, undivided interests with the right of survivorship — when one owner dies, their share passes to the surviving owners.

Community Property

In community property states, most property acquired during marriage is owned equally by both spouses, regardless of who paid for it.

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