Marriage and Property Ownership: What Nevada Couples Need to Know

When a married couple sits down at escrow to finalize their new home purchase, one of the most consequential decisions of their financial lives is made in a matter of seconds, and most of the time, it’s made for them. By the time they reach the deed, they’ve already signed hundreds of pages of mortgage and title documents. And almost without exception, the deed is handed to them pre-filled with the words “Husband and Wife as Joint Tenants.” Most couples sign it without question.

But for married homeowners in Nevada, joint tenancy is rarely the best way to hold title. There is a smarter option available – one that can save tens of thousands of dollars in taxes, that almost no one at escrow will tell you about.

Understanding How Married Couples Can Hold Title in Nevada

Nevada law gives married couples several ways to hold title to real estate. The three most common are:

• Joint Tenancy – each spouse holds an equal, undivided interest in the property. Upon death, the surviving spouse automatically inherits the full property.
• Tenancy in Common – each spouse owns a defined share that can be passed to heirs through a will or the probate process, rather than automatically to the surviving spouse.
• Community Property with Rights of Survivorship (CPRS) – a Nevada-specific option that combines the automatic transfer of joint tenancy with significant tax advantages that joint tenancy does not offer.

For most married couples in Nevada, CPRS is the best option. Yet it is rarely presented at escrow, and most couples have never heard of it.

What Is Community Property with Rights of Survivorship?

Nevada is one of only a handful of community property states in the U.S., and it is one of the few that allows married couples to hold property as Community Property with Rights of Survivorship (CPRS). Under this form of ownership, both spouses own equal shares of the property, and upon the death of one spouse, full ownership transfers automatically to the survivor, no probate, no court involvement, no delay.

On the surface, this sounds identical to joint tenancy. The critical difference lies in how the IRS treats the property for tax purposes when one spouse dies, and the financial impact can be substantial.

The Stepped-Up Basis: Why CPRS Saves Money

When someone inherits property, the IRS allows what is called a stepped-up basis – the property’s cost basis is reset to its current fair market value at the time of the original owner’s death. This reduces or eliminates capital gains tax on any appreciation that occurred during the deceased owner’s lifetime.

The difference between joint tenancy and CPRS comes down to how much of the property receives this stepped-up basis:

Joint Tenancy: Half a Step Up

In a joint tenancy, the stepped-up basis applies only to the deceased spouse’s half of the property. The surviving spouse’s original half retains its old cost basis, meaning any gain on that half is still subject to capital gains tax when the property is eventually sold.

CPRS: A Full Step Up

Under CPRS, both halves of the property receive a stepped-up basis upon the death of the first spouse. The entire property is reset to current market value. When the surviving spouse sells, the capital gain is measured from that new, higher basis – often resulting in little to no taxable gain at all.

This distinction is the difference between paying taxes on a large gain and paying nothing. According to the IRS rules on inherited property, this stepped-up basis provision is one of the most powerful and most underutilized tax advantages available to married property owners.

A Real-World Example: The Tax Cost of Joint Tenancy

 

Consider a married couple who purchases a home in Las Vegas for $100,000, taking title as joint tenants. Years later, the first spouse passes away. The surviving spouse sells the property for $600,000 to downsize.

Here is how the tax consequences play out under each scenario:

Under Joint Tenancy

• Total gain: $500,000
• Stepped-up basis applies to deceased spouse’s half only
• Surviving spouse’s taxable capital gain: $250,000
• This $250,000 counts against her capital gains and estate tax exemptions

Under CPRS

• Full stepped-up basis on entire property: $600,000
• Capital gain upon sale: $0
• Amount counted against estate tax exclusion: $0

The only difference was four words on the deed. By simply taking title as CPRS instead of joint tenants, the surviving spouse avoided a significant and entirely unnecessary tax bill.

This is not an edge case. Nevada home values have risen sharply in recent years, and the Nevada real estate market shows no sign of reversing course. What once seemed like a modest property can become a substantial taxable asset, and the way title is held will determine how much of that wealth the surviving spouse actually keeps.

How Property Titling Affects Nevada Divorce

The way a couple holds title also matters significantly if the marriage ends. Nevada is a community property state, meaning that assets acquired during the marriage are generally divided equally in a Nevada divorce. However, how title is held can affect the characterization of an asset as separate or community property.

A prenuptial or postnuptial agreement can also address property titling explicitly, defining how real estate is to be treated in the event of divorce or death. For couples with significant assets, this type of advance planning is worth serious consideration.

If you are going through a divorce and have questions about how property is divided, or if you need guidance on alimony and other financial matters, our Nevada divorce attorneys can help.

Other Ways to Protect Your Estate in Nevada

CPRS is the most straightforward solution for married couples buying a home together, but it is not the only tool available. Depending on your situation, the following options may also be worth discussing with an estate planning attorney:

Revocable Living Trust

Placing your property in a revocable living trust can also shield your estate from unnecessary tax exposure while offering additional flexibility. A trust allows you to control how your assets are distributed, avoids probate entirely, and can be structured to benefit a surviving spouse, children, or other beneficiaries. Trusts are particularly useful for blended families or anyone with a more complex estate.

Deed Upon Death

Nevada also allows property owners to use a deed upon death, sometimes called a transfer-on-death deed. This allows you to name a beneficiary who will inherit the property automatically at your death, without going through probate. It is revocable during your lifetime and does not affect your ownership rights while you are alive.

Comprehensive Estate Planning

Property titling is just one piece of a complete Nevada estate plan. A thorough plan may also include a last will and testament, durable power of attorney, advance directive, and healthcare proxy, all working together to protect your assets and your family. The Nevada Estate Planning guide available on our site is a good starting point for understanding what a complete plan looks like.

Talk to a Nevada Attorney Before You Sign

Most couples are handed a deed at escrow and told to sign. They are not told about CPRS. They are not shown a comparison of the tax consequences. By the time they realize their title was structured incorrectly, it can take legal work and sometimes significant tax expense to fix.

The good news is that it is possible to change how titles are held after the fact. An attorney can help you re-title property, explore trust options, and make sure your real estate holdings are structured in a way that protects your estate and minimizes unnecessary taxes.

Whether you are buying a new home, revisiting an existing property, or planning for the future, the real estate and estate planning team at Drizin Law can help you make the right call. Contact us today to schedule a consultation.