Tenants in Common vs Joint Tenancy: State Rules and Tax (2026)

The two forms side by side, in the words of the statutes

Most pages that rank for this question explain the common-law idea (equal shares, survivorship, the four unities) and stop there. The statutes we read are shorter and more specific: they say what a deed creates when it is silent, what words are needed to create survivorship, and who may break the tenancy. The table puts the two forms next to each other, with the source of each cell in the last column.

The first row points to a planning trap that is not a tax point. In the statutes we read, survivorship is the exception that needs words: a deed to “A and B” with nothing more is a tenancy in common in six of the eight jurisdictions we could read, and a joint estate without survivorship in the other two (table below). A family that believes the house passes automatically to the survivor may be holding a tenancy in common whose half passes under the deceased owner’s will, or by intestacy if there is no will.

What a deed that says nothing creates: 15 states and DC

We ranked the states by the Census Bureau’s Vintage 2024 resident population estimates for July 1, 2024: California (39,431,263), Texas, Florida, New York, Pennsylvania, Illinois, Ohio, Georgia, North Carolina, Michigan, New Jersey, Virginia, Washington, Arizona and Tennessee (15th, 7,227,750); Massachusetts is 16th at 7,136,171. For each we tried to read the statute from the legislature’s own site on October 13, 2026. Eight of the 16 jurisdictions are read; eight are not verified, and we did not fill those cells from memory or from law-firm pages: the legislature sites for Illinois, Ohio, Pennsylvania, New Jersey and Tennessee did not respond from our network, North Carolina’s and Michigan’s returned a security block to automated requests, and Georgia’s Official Code is not hosted on the legislature’s own site (our reading), so we did not read it.

What the table shows (our reading).

• Survivorship has to be written. In every jurisdiction we could read, the joint tenancy with survivorship needs an express declaration, and in Virginia and Texas the default joint estate has none. Outside the spousal rules below, a deed to two names without the words is not enough in these jurisdictions.
• Spouses are the exception, and the exception differs. New York presumes an entireties tenancy for real property; the District of Columbia lets a deed create one but starts from a tenancy in common; Virginia starts from equal halves; Washington and Arizona sit inside community property rules; California and Texas need a separate written election for community property to pass to the survivor.
• The deed from a sole owner to himself and another is covered. California (683(a)), Arizona (33-431(B)) and Washington (64.28.010) each say a joint tenancy may be created by a transfer from a sole owner to himself and others, which lets an owner add a co-owner with one deed (our reading).
• Partition is open to both forms. None of the partition statutes we read distinguishes a tenant in common from a joint tenant for the right to ask the court to divide or sell (New York 901, Virginia 8.01-81(A), the District of Columbia 16-2901(a)).
• Check the state before relying on a form. The eight not-verified states include every state ranked 5th through 11th by population; a reader in one of them needs the current section from the state’s site or an attorney, not this table.

What the Internal Revenue Code says at death, form by form

Three sections decide how much of a co-owned property is in the dead owner’s gross estate, and section 1014(b)(9) connects that to basis: it reaches property acquired from the decedent “by reason of death, form of ownership, or other conditions” when that property is included in the gross estate. Whatever is included takes a basis equal to its value at death (26 U.S.C. 1014(a)(1)), and the gain that built up in the owner’s life is never taxed. This is an income tax point and does not depend on owing estate tax: 4,532 of the 7,195 returns filed in 2024 were nontaxable (IRS Statistics of Income). The step-up rules themselves are in our step-up guide; this page covers what changes with the form of title.

Two points in the table are easy to miss. First, the one-half rule is a fixed half: “This is true regardless of how much each contributed toward the purchase price” (IRS Publication 559 (2025)). Second, the rule needs the spouses to be “the only joint tenants” (26 U.S.C. 2040(b)(2)(B)): a house titled to a married couple and an adult child is an ordinary joint tenancy, and section 2040(a) applies to all of it.

The IRS’s own examples

IRS Publication 559 (2025) works one set of facts twice. A rental was bought for $60,000, with one owner paying $15,000 and the other $45,000; it was worth $100,000 when the $45,000 payer died, and $20,000 of depreciation had been deducted. If the two were siblings holding as joint tenants with survivorship, the survivor’s basis is $80,000; if they were spouses holding as tenants by the entirety, it is $70,000. The difference is the contribution rule against the fixed half. Publication 551 (December 2025) adds a case where the survivor paid for one-third and the decedent two-thirds of a $30,000 purchase, with $12,000 of depreciation and a value of $60,000 at death, and the survivor’s basis is $44,000.

The same house under four titles (our arithmetic)

Assume a house bought for $400,000, with A paying $300,000 and B $100,000, worth $1,000,000 when A dies, with no depreciation and no estate tax owed. The formula is the one in Publication 559: the survivor’s original basis plus the value of the part included in the decedent’s estate. For spouses the original basis counts as half of cost.

Read the rows against each other. The sibling joint tenancy and the tenancy in common produce the same total gain here, but they put it on different people: in the tenancy in common A’s heirs sell a stepped-up 75% and B pays tax on his own 25%, while in the joint tenancy B owns all of it with an $850,000 basis. The spouses’ fixed half leaves a bigger gain than the siblings’ contribution rule only because A paid three-quarters of the cost; had A paid everything, the sibling case would reach a full step-up and the spouses’ case would still stop at half (our arithmetic). The last row is the parent who adds a child to the deed: during life that deed is a gift of half the value if the child can sever (26 CFR 25.2511-1(h)(5)) and the child takes the parent’s basis on the gifted half (26 U.S.C. 1015(a)); if the parent dies still joint, all of it is included and all of it steps up (our reading of section 2040(a)). The choice between a joint deed and a plain inheritance is therefore a trade of probate, gift reporting and basis, not a free option; see also the annual gift tax exclusion.

Spouses who bought before 1977

The fixed one-half rule came from Congress in 1976. The Code’s own notes on section 2040 say the amendment that added subsection (b) “shall apply to joint interests created after December 31, 1976” (Pub. L. 94-455, section 2002(d)(3)), and that Pub. L. 97-34 repealed the old subsection (d), “relating to joint interests of husband and wife created before 1977”, for decedents dying after December 31, 1981. Those effective dates are why a spouses’ joint tenancy from before 1977 can raise a different question from one created later (our reading). A Sixth Circuit decision at 975 F.2d 286 (No. 91-6327), filed September 16, 1992, concerns the 50% treatment under section 2040; in the record we read, the taxpayer “prevailed in a tax refund suit against the United States” and the government appealed, arguing that section 2040 “requires including only 50%”. We quote only the CourtListener excerpt: we could not retrieve the full opinion, so we do not state its facts, its reasoning or what the court of appeals did. Publication 559 (2025) states the one-half rule for qualified joint interests without mentioning creation dates (our reading of the passage). A surviving spouse with a joint tenancy created before 1977, or a lawyer advising one, needs the current case law and the 1976 and 1981 effective-date rules before choosing a basis; this page does not resolve it.

Depreciation is the other trap. Section 1014(b)(9) reduces the basis of property acquired before the decedent’s death by “the amount allowed to the taxpayer as deductions” for wear and tear before death, so a surviving co-owner who depreciated a rental keeps that reduction on the portion the survivor already owned (the IRS examples subtract half of the depreciation in each case). A rental owned as tenants in common works the same way for each co-owner’s own share.

What the IRS data show about joint property

The Internal Revenue Service publishes a table of the estate tax returns (Form 706) filed each year, with a line for total joint property and another for community property. It is the only official count we know of that shows how often large estates hold property jointly. The table below is from Table 1 for returns filed in 2024 (most were for deaths in 2023, when the filing threshold was $12.92 million of gross estate) and in 2023. The IRS table is in thousands of dollars; the conversions and percentages are ours.

Three readings (ours). First, joint ownership is not a small-estate habit: between 46% and 49% of returns reported joint property in every gross-estate band. Second, it is far more common on the returns that owed no tax (58.1%) than on those that did (30.6%), which fits couples who hold property jointly and leave it to each other; the IRS table also shows 3,720 returns claiming $81.88 billion of bequests to a surviving spouse. Third, the dollars are modest against the whole: the $8.65 billion of joint property is 3.5% of the $248.94 billion of gross estate on 2024-filed returns, against $59.74 billion of community property on 1,069 returns. The table does not define “total joint property” or say whether it is the full value of the jointly held assets or the part included in the estate, so we do not read it as a tax base; we read it as how often the form shows up.

Partition, creditors and lenders

Partition: either form can be broken by a lawsuit. A co-owner who cannot agree with the others can ask a court to divide the property or sell it. New York gives that right to a person holding “real property as joint tenant or tenant in common” and to an heir “whether he is in or out of possession” (Real Property Actions and Proceedings Law 901(1), (3)); Virginia says tenants in common and joint tenants “shall be compellable to make partition and may compel partition” (Code of Virginia 8.01-81(A)); the District of Columbia lets its Superior Court decree partition on the complaint of a tenant in common or joint tenant, or a sale when the property cannot be divided without loss or injury (D.C. Code 16-2901(a)); Florida allows a public sale when land cannot be divided without prejudice (Florida Statutes 64.071(1)). Several states now add heirs-property rules that push courts toward partition in kind or a buyout: Texas Property Code chapter 23A (effective September 1, 2017), Florida Statutes 64.201 to 64.214 (chapter 2020-55, Laws of Florida) and the in-kind preference in Code of Virginia 8.01-81 (our reading). A family that inherits a house as tenants in common without an agreement is the case these laws were written for.

Creditors: the form matters, and so does the state. A federal tax lien attaches to “all property and rights to property” of the person who owes the tax (26 U.S.C. 6321). In a decision reported at 535 U.S. 274 (argued January 14, 2002, decided April 17, 2002), the Supreme Court held that a husband’s interests in property held as tenants by the entirety are “property” or “rights to property” to which a federal tax lien may attach. Against private creditors, the protection of entireties property is a state-law question. Virginia and the District of Columbia have statutes that keep creditor immunity when entireties property moves into spouses’ trusts under stated conditions (Code of Virginia 55.1-136(C); D.C. Code 42-516(d)), and Washington’s joint-tenancy statute says a transfer “shall not derogate from the rights of creditors” (RCW 64.28.010). In bankruptcy, a trustee may sell the estate’s interest and “the interest of any co-owner” in property held as a tenant in common, joint tenant or tenant by the entirety only if, among other conditions, “partition in kind of such property among the estate and such co-owners is impracticable” (11 U.S.C. 363(h)); and an interest held by the entirety or as a joint tenant is exempt only “to the extent” it is exempt from process under applicable nonbankruptcy law (11 U.S.C. 522(b)(3)(B)). We did not read the other states’ creditor statutes; do not infer protection from the form of title alone.

Lenders: Garn-St Germain protects some transfers, not all. A lender may enforce a due-on-sale clause (12 U.S.C. 1701j-3(b)(1)), and outside the exceptions the lender’s option is “exclusively governed by the terms of the loan contract” (1701j-3(b)(2)). Section 1701j-3(d) lists transfers a lender may not act on for a loan on residential real property containing “less than five dwelling units”, including “a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety” (d)(3), “a transfer to a relative resulting from the death of a borrower” (d)(5) and “a transfer where the spouse or children of the borrower become an owner of the property” (d)(6). The Office of the Comptroller of the Currency rule for federal savings associations, 12 CFR 191.5(b), applies its list to “any loan on the security of a home occupied or to be occupied by the borrower”, which is narrower than the statute (our reading). Two limits follow (our reading): an owner who adds an unrelated co-owner, or an investor who holds a five-unit or commercial building, is not on the statutory list, and the lender’s contract decides. Read the due-on-sale clause before signing a deed to a sibling, partner or investor.

Investors: tenancy-in-common interests, Rev. Proc. 2002-22 and the DST alternative

Investors meet this subject in a different form: a sponsor sells undivided fractions of one building to up to a few dozen buyers, each of whom takes a deed as a tenant in common, so that a seller of other real estate can put the proceeds into it as a like-kind exchange under 26 U.S.C. 1031. The risk is that the IRS treats the co-ownership as a business entity, because an interest in an entity is not eligible for tax-free exchange under section 1031(a)(1) (Rev. Proc. 2002-22, section 1). 26 CFR 301.7701-1(a)(2) gives the starting point: “mere co-ownership of property that is maintained, kept in repair, and rented or leased does not constitute a separate entity for federal tax purposes”. Rev. Proc. 2002-22 then “specifies the conditions under which the Internal Revenue Service will consider a request for a ruling” that an undivided fractional interest in rental real property is not an interest in a business entity. It is not a safe harbor: even if the conditions are not met, the IRS “may consider a request” where the facts clearly establish that a ruling is appropriate, and the IRS may decline to rule even when they are (Rev. Proc. 2002-22, section 4). Section 6 lists 15 conditions:

For the 1031 rules themselves, see our 1031 exchange rules guide; for a tenancy in common that began as a partnership, see the drop-and-swap guide, which covers the same revenue procedure from the partnership side.

DST against TIC, in one paragraph. In Rev. Rul. 2004-86 the IRS ruled that a taxpayer may exchange real property for an interest in a Delaware statutory trust of the kind it described “without recognition of gain or loss under § 1031, if the other requirements of § 1031 are satisfied”. A DST investor holds a beneficial interest in a trust run by a trustee; a TIC investor holds a deed and, under Rev. Proc. 2002-22, keeps the right to approve the sale, the leases, the manager and the debt, and to partition (our reading). That control is the tax-law reason TIC offerings stay small and the reason one co-owner’s death, divorce or bankruptcy matters to the others: the co-owner’s interest goes to heirs or a trustee under the rules in this page, and the others hold the property with them. The DST structure, its fees and its Form D filings are in our Delaware statutory trust guide.

What a co-owner or heir can do with this

These are the decision points the statutes and the IRS documents put in front of a co-owner, an heir or an investor; they are not instructions for any one situation.

• Start from the recorded deed, not from memory. What a deed creates is set by the words in it and the state default (table above). In the jurisdictions we could read, survivorship is created only by express words (Virginia and Texas by default have none), so a family that thinks a house passes to the survivor may be holding a tenancy in common.
• Compare the tax profile before choosing the form. For spouses outside community property states the fixed one-half rule limits the step-up to one half (26 U.S.C. 2040(b)(1)); for siblings or a parent and child the contribution rule can include all of it (2040(a)). Our example above shows the gap in dollars. Joint titles also change who files what: Schedule E of Form 706 for joint interests, Schedule A for a tenant in common’s interest (Form 706 instructions).
• Adding a child to the deed is a gift, a basis choice and a lender question. The gift is half the value if the child can sever (26 CFR 25.2511-1(h)(5)); the child takes the donor’s basis on that half (26 U.S.C. 1015(a)); the lender’s protection depends on the loan and the property (12 U.S.C. 1701j-3(d)). Other ways to pass a house at death are in our transfer-on-death deed guide and, for Florida, the Lady Bird deed guide.
• Heirs who share a house as tenants in common have partition rights and no default rules for who pays what. Any co-owner can ask a court to divide or sell (New York 901, Virginia 8.01-81(A), D.C. 16-2901); heirs-property statutes in Texas, Florida and Virginia shape how the court does it. A written agreement among the heirs is the document the statutes do not supply.
• Investors should ask the sponsor in writing which Rev. Proc. 2002-22 conditions the offering meets and whether a ruling exists. The revenue procedure is not a safe harbor, and a 36th owner would break the cap (section 6.02).
• For an estate near the federal threshold, the form of title is one input among several. See our estate tax exemption guide for the current exclusion; IRS data show most returns owe nothing, and basis matters more often than the estate tax itself.

Who to ask. Title and co-ownership questions, such as what a particular deed creates, how to sever a joint tenancy, how to record a co-ownership agreement or whether a state’s rule applies to a trust or an LLC, need a real-estate attorney licensed in the state where the property sits. A CPA handles the basis, Form 706 and Form 709 questions. A fee-only or fee-based financial adviser can look at the whole position (the property, the other assets, the heirs) but does not draft or correct a deed. The adviser match below is a referral, and we may be paid if you use it.

FAQ

Sources, read and saved on October 13, 2026: California Civil Code 682.1, 683 and 686 and Code of Civil Procedure 872.210 (leginfo.legislature.ca.gov); Texas Estates Code chapters 101 and 112 and Property Code chapter 23A (statutes.capitol.texas.gov); Florida Statutes 64.011, 64.071, 64.201, 689.11 and 689.15 (leg.state.fl.us); New York Estates, Powers and Trusts Law 6-2.2 and Real Property Actions and Proceedings Law 901 (nysenate.gov); Code of Virginia 55.1-134 to 55.1-136 and 8.01-81 (law.lis.virginia.gov); RCW 64.28.010, 64.28.020, 64.28.040 and 7.52.010 (app.leg.wa.gov); Arizona Revised Statutes 33-431 and 12-1211 (azleg.gov); D.C. Code 16-2901, 42-516 and 42-517 (code.dccouncil.gov); 26 U.S.C. 761, 1014, 1015, 1031, 2033, 2040 and 6321, 11 U.S.C. 363 and 522 and 12 U.S.C. 1701j-3 (govinfo.gov, U.S. Code); 26 CFR 20.2040-1, 25.2511-1 and 301.7701-1 and 12 CFR 191.5 (ecfr.gov); IRS Publications 551 (Rev. 12-2025) and 559 (2025), Instructions for Form 706 (Rev. 7-2026), Rev. Proc. 2002-22 and Rev. Rul. 2004-86 (irs.gov); IRS Statistics of Income, Estate Tax Returns Filed in 2024 and 2023, Table 1 (24es01fy.xlsx, 23es01fy.xlsx), read with the script saved with the data; the Supreme Court decision at 535 U.S. 274 (2002) (govinfo.gov, United States Reports); the CourtListener record of 975 F.2d 286 (6th Cir. 1992); and U.S. Census Bureau, Vintage 2024 state population estimates (NST-EST2024-ALLDATA.csv). The legislature sites of Pennsylvania, Illinois, Ohio, Georgia, North Carolina, Michigan, New Jersey and Tennessee could not be read and are marked not verified. Percentages, conversions to dollars and the worked example are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.