Community vs. Separate Property

In community property states, most property acquired during marriage (except for gifts or inheritances) is considered community property (owned jointly by both partners) and is divided upon divorce, annulment, or death. Separate property is owned by one spouse only. It is property that a spouse brings into the marriage or receives via gift or inheritance during the marriage. Unless there is specific evidence to the contrary, the law assumes all assets belonging to a couple are community property. The community property system is usually justified by the idea that such joint ownership recognizes the theoretically equal contributions of both spouses to the creation and operation of the family unit.

In states that do not have community property laws, assets are owned by whoever’s name appears on the deed or registration.

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Community Property

Separate Property

Definition Property acquired while married and residing in a community property state Property owned before marriage or never shared by spouses
Examples Wages, salaries, housing, investments Gifts, inheritances, property acquired in one named and never used to benefit other spouse
Tax Reporting Each spouse reports 50% of total community income on their tax return when filing separately. Each spouse reports 100% of their individual (separate) income on their tax return when filing separately.
States Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin All states

Contents: Community vs Separate Property

Community Property states highlighted in Red
Community Property states highlighted in Red

edit What is Community Property and Community Income?

Community property includes most property that was acquired while married and residing in a community property state. It includes wages, salaries and self-employment income, as well as assets such as houses and cars. Investment income from assets that are community property is also considered in this category.

Separate property was either owned separately before marriage, bought with separate funds (and never used for the benefit of the partner) or is property that both spouses have agreed to convert to separate property through a legally valid spousal agreement. It can include gifts received by one spouse during or before marriage, property acquired in spouse’s name and never used for benefit of other spouse, inheritances, and certain personal injury awards. Investment income from separate property is considered separate income.

edit Examples

edit Community Property States

Community property laws exist in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

edit Tax Reporting

If filing for taxes in separate returns (married, filing separately) each spouse should report 50% of the value of their community income and 100% of the value of their separate income on their tax return.

edit California Divorce Law

This video explains community vs separate property laws in California during a divorce:

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