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Subject Author Date
California Community Property Question CWLee 10-08-2007
Posted by CWLee on October 8, 2007, 6:43 pm
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 (Since my question has both legal and tax issues, I'm
posting to these two newsgroups.)

Moderator:
In the future, just crosspost listing misc.legal.moderated
first

Before marriage person A purchases a condo, and lives in it
for several years. Person A then marries, lives elsewhere,
and rents the condo to a series of tenants. Condo ownership
was not formally changed. Rental income deposited to, and
expenses (including mortgage payments) paid from, a joint
checking account into which both husband and wife deposited
their pay checks and from which both wrote checks for
various other purposes. Couple filed joint tax returns,
including the condo related rental income and expenses, and
deducted interest on the condo mortgage.

Person A is now contemplating divorce, and wonders if the
condo has become community property by default, since rental
income and associated expenses, and mortgage payments on the
condo, flowed through the joint checking account with A's
spouse.

Any insight appreciated that would help me advise party A. I
would especially like a good reference book addressing
California issues of community and separate property issues
as related to divorce. I have reviewed my (old) Nolo Press
catalogue and did not see anything that seemed on target.

--
----------
CWLee
Former slayer of dragons; practice now limited to sacred
cows. Believing we should hire for quality, not quotas, and
promote for performance, not preferences.

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Posted by Stuart Bronstein on October 9, 2007, 2:08 am
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 CWLee wrote:

> Before marriage person A purchases a condo, and lives in it
> for several years. Person A then marries, lives elsewhere,
> and rents the condo to a series of tenants. Condo ownership
> was not formally changed. Rental income deposited to, and
> expenses (including mortgage payments) paid from, a joint
> checking account into which both husband and wife deposited
> their pay checks and from which both wrote checks for
> various other purposes. Couple filed joint tax returns,
> including the condo related rental income and expenses, and
> deducted interest on the condo mortgage.
>
> Person A is now contemplating divorce, and wonders if the
> condo has become community property by default, since rental
> income and associated expenses, and mortgage payments on the
> condo, flowed through the joint checking account with A's
> spouse.

In California real estate per se does not become community
property by default. But the community may get an interest
in the increase in value in the property.

Rental income from separate property would not have been
community property if it had not been comingled in a joint
account. If they had kept it separate, it would still all
be separate. But since it was, it will probably be
considered a gift to the community. There is a formula for
calculating the community interest based on community
mortgage payments, but I don't remember it off the top of my
head.

Stu

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Alex M on October 16, 2007, 1:19 am
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> CWLee wrote:

>> Before marriage person A purchases a condo, and lives in it
>> for several years. Person A then marries, lives elsewhere,
>> and rents the condo to a series of tenants. Condo ownership
>> was not formally changed. Rental income deposited to, and
>> expenses (including mortgage payments) paid from, a joint
>> checking account into which both husband and wife deposited
>> their pay checks and from which both wrote checks for
>> various other purposes. Couple filed joint tax returns,
>> including the condo related rental income and expenses, and
>> deducted interest on the condo mortgage.
>>
>> Person A is now contemplating divorce, and wonders if the
>> condo has become community property by default, since rental
>> income and associated expenses, and mortgage payments on the
>> condo, flowed through the joint checking account with A's
>> spouse.

> In California real estate per se does not become community
> property by default. But the community may get an interest
> in the increase in value in the property.
>
> Rental income from separate property would not have been
> community property if it had not been comingled in a joint
> account. If they had kept it separate, it would still all
> be separate. But since it was, it will probably be
> considered a gift to the community. There is a formula for
> calculating the community interest based on community
> mortgage payments, but I don't remember it off the top of my
> head.

Thanks Stu,
Can you please point us to the california law codes where we
can read this info.

thanks

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Stuart Bronstein on October 17, 2007, 2:09 am
Please log in for more thread options
Alex M wrote:

>> In California real estate per se does not become community
>> property by default. But the community may get an interest
>> in the increase in value in the property.
>>
>> Rental income from separate property would not have been
>> community property if it had not been comingled in a joint
>> account. If they had kept it separate, it would still all
>> be separate. But since it was, it will probably be
>> considered a gift to the community. There is a formula for
>> calculating the community interest based on community
>> mortgage payments, but I don't remember it off the top of my
>> head.

> Thanks Stu,
> Can you please point us to the california law codes where we
> can read this info.

You can find the California Family Code here:
http://snipurl.com/1s849

But the rules for determining are probably found in the
cases. Your best bet is to go to your nearest law library
(found in law schools and in most courthouses) and check out
one of the books on division of property in divorce.

Stu

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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