California Code of Regulations › Title 18 - Public Revenues › Division 2.5 - State Controller › Chapter 2 - Gift Tax › Article 1 - Definitions › Section 15104.50 - Transfer Between Spouses of Real Property Owned by Husband and Wife in Joint Tenancy Created on or After September 11, 1957 and Before January 1, 1981

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
If a joint tenancy between husband and wife is created on
					 or after September 11, 1957 and before January 1, 1981, either by one spouse
					 alone or by both spouses, and, pursuant to Revenue and Taxation Code Section
					 15104.5,
					 then in effect, the donor does not elect to have the creation of the joint
					 tenancy treated as a transfer by gift, and thereafter the joint tenancy is
					 changed to some other form of ownership prior to January 1, 1981, the donor
					 spouse shall be deemed to have made a transfer by gift to the extent that the
					 proportion of total consideration furnished by such spouse multiplied by the
					 value of the property at the date of terminating the joint tenancy exceeds the
					 value of the interest retained by such spouse.
If the joint tenancy is created with community property
					 each spouse contributes one-half of the community property and the transfer or
					 conversion of the community property into the joint tenancy between the spouses
					 is not deemed a transfer by gift (see Section
					 15104.2).
If the joint tenancy between husband and wife, created on
					 or after September 11, 1957, is changed to some other form of ownership after
					 January 1, 1981, the change in the form of ownership comes within the marital
					 exclusion pursuant to the provisions of Revenue and Taxation Code Section
					 15310,
					 as amended and effective January 1, 1981, and no gift tax is due.
This regulation may be illustrated by the following
					 examples:
EXAMPLE (1). In 1960, husband transfers his separate real
					 property, having a value of $25,000, to himself and wife, as joint tenants.
					 Husband does not elect to have the transfer treated as a gift. In 1975, husband
					 and wife enter a community property agreement, changing the joint tenancy to
					 community property. Husband has made a gift to wife of one-half the value of
					 the property at the date of the community property agreement.
EXAMPLE (2). In 1960, husband transfers his separate real
					 property, having a value of $10,000, to himself and wife, as joint tenants.
					 Husband does not elect to have the transfer treated as a gift. Thereafter, the
					 real property is improved with community property funds in the amount of
					 $20,000. The property is subsequently sold for $60,000, and husband and wife
					 hold the proceeds of sale as community property.
Husband has furnished two-thirds consideration for the
					 joint tenancy property ($10,000 separate and $10,000 community), and he has
					 retained a one-half interest in the proceeds from the sale of the property.
					 Husband has made a gift to wife of $10,000 [$40,000 ( 
					 2/3 x 60,000)
					 - 30,000 ( 
					 1/2 x 60,000)
					 = $10,000].
EXAMPLE (3). In 1960, husband transfers his separate real
					 property, having a value of $20,000, to himself and wife, as joint tenants.
					 Husband does not elect to have the transfer treated as a gift. Thereafter, the
					 real property is improved with community property funds in the amount of
					 $15,000. The property is sold in 1981 for $85,000, and husband and wife hold
					 the proceeds of the sale as community property. The transfer from the husband
					 to the wife comes within the marital exclusion pursuant to Revenue and Taxation
					 Code Section
					 15310,
					 as amended and effective for gifts made after January 1, 1981, and no gift tax
					 is due.
1. Amendment
					 filed 7-2-81; effective thirtieth day thereafter (Register 81, No.
					 27).
Note: Authority cited: Section
						16506,
						Revenue and Taxation Code. Reference: Section
						15104.5,
						Revenue and Taxation Code.