Crazy question - can two couples co-own a primary home?

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HomerJ
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Crazy question - can two couples co-own a primary home?

Post by HomerJ » Fri Jul 31, 2020 2:07 pm

If we bought a home with another couple, and both lived there 6+ months a year, could we both claim it as our primary home for state resident and state tax purposes?
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downshiftme
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Re: Crazy question - can two couples co-own a primary home?

Post by downshiftme » Fri Jul 31, 2020 2:11 pm

I don't see a problem with doing that, but each person doesn't own 100% of the house, so if you are thinking of deductions and such you'd have to treat it as each owning a part of a house.

If two couples rented opposite sides of a duplex, each could claim it as their residence.

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HomerJ
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Re: Crazy question - can two couples co-own a primary home?

Post by HomerJ » Fri Jul 31, 2020 2:38 pm

What if one couple got sued?

How is the equity in the house handled? How do you ensure 50/50 between two couples? What if we bought it 25/75? Curious what kind of issues that causes on the title.

Maybe the right move is for one couple to buy it 100%, and rent out a room to the other couple for 6+ months a year so they can establish residency.
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FIREchief
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Re: Crazy question - can two couples co-own a primary home?

Post by FIREchief » Fri Jul 31, 2020 2:43 pm

HomerJ wrote:
Fri Jul 31, 2020 2:07 pm
If we bought a home with another couple, and both lived there 6+ months a year, could we both claim it as our primary home for state resident and state tax purposes?
This begs so many other questions and comments, but I'll resist (for now)..... :P

When it comes to establishing residency, I doubt most states care if you own a whole house, half a house, a tent, etc. Isn't it more about the sources of earned income and the time spent living in the state during the year? I think that part year is part year, whether it's one day or 364 days. I could be wrong as I'm not familiar with the income tax systems for all states. Now, if you have no earned income and wish to live in Texas 183 days in the year to avoid any state income taxes on unearned income, than that I have no idea. I guess I would be interested in somebody who knows explaining it to us.
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Re: Crazy question - can two couples co-own a primary home?

Post by fourwheelcycle » Fri Jul 31, 2020 3:07 pm

I doubt a home in a state where you are not a resident can be considered your primary home. If each couple lives in the home for six months each year, I guess it would depend which six months. Only the couple that lives in the house for 183 or more days each year would qualify as state residents. Maybe I am wrong about this and different states have different laws about what constitutes residency, but 183 days is the qualifier I am most familiar with. Maybe residency is calculated differently if you split your time among three homes.

I have a friend who owns a main home and a year-round lake home 15 miles apart, with one home in an income tax state and the other in a state with no income taxes. He is very careful to document how many nights he stays in each home. Guess which home gets more than half the nights?

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Re: Crazy question - can two couples co-own a primary home?

Post by neilpilot » Fri Jul 31, 2020 3:51 pm

fourwheelcycle wrote:
Fri Jul 31, 2020 3:07 pm
I doubt a home in a state where you are not a resident can be considered your primary home. If each couple lives in the home for six months each year, I guess it would depend which six months. Only the couple that lives in the house for 183 or more days each year would qualify as state residents. Maybe I am wrong about this and different states have different laws about what constitutes residency, but 183 days is the qualifier I am most familiar with. Maybe residency is calculated differently if you split your time among three homes.

I have a friend who owns a main home and a year-round lake home 15 miles apart, with one home in an income tax state and the other in a state with no income taxes. He is very careful to document how many nights he stays in each home. Guess which home gets more than half the nights?
Of course residency is not always the key component that determines your exposure to state income tax. For several decades I've lived in a state that does not tax earned income, but that didn't stop the neighboring state from taxing my income earned in that state.

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Re: Crazy question - can two couples co-own a primary home?

Post by HomerJ » Fri Jul 31, 2020 3:52 pm

The idea is that we would all make that our primary home.

All mail would go there, register to vote, get driver's license, and spend 183+ days (or whatever the requirement is) living there.

We may not always be there at the same time (both couples like to travel. have plans to rent for months in other locations, and have other family to visit), but there would be a decent amount of overlap. Family, get along great (so far!)

By sharing a place, we get much nicer house with a great view than if we each bought a smaller house for ourselves. They have floor plans with two master bedrooms (plus more bedrooms)

Retirement community, no one working.

It may be against HOA rules to be honest... I'd have to check that.

Although those two master bedrooms floor plans are obviously set up for mother-in-law suites... We're just changing it to a sister-in-law suite.
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Re: Crazy question - can two couples co-own a primary home?

Post by ResearchMed » Fri Jul 31, 2020 4:06 pm

FIREchief wrote:
Fri Jul 31, 2020 2:43 pm
HomerJ wrote:
Fri Jul 31, 2020 2:07 pm
If we bought a home with another couple, and both lived there 6+ months a year, could we both claim it as our primary home for state resident and state tax purposes?
This begs so many other questions and comments, but I'll resist (for now)..... :P

When it comes to establishing residency, I doubt most states care if you own a whole house, half a house, a tent, etc. Isn't it more about the sources of earned income and the time spent living in the state during the year? I think that part year is part year, whether it's one day or 364 days. I could be wrong as I'm not familiar with the income tax systems for all states. Now, if you have no earned income and wish to live in Texas 183 days in the year to avoid any state income taxes on unearned income, than that I have no idea. I guess I would be interested in somebody who knows explaining it to us.
I would generally agree with FIREchief.

I can't think why what one couple (A) does (where *they* live, and where *they* spend their time) would affect the residency of couple B.
And if "who owns the house" has a major impact, then a lot of renters should really know about this, including unrelated renters sharing an apartment/house.

There has been considerable discussion about how some states try to make *sure* that you pay THEIR taxes rather than the taxes where you have another residence.
Things that matter: How many nights you actually sleep there; where you consider or claim you "reside" (e.g., voting); which residence has the photos of your loved ones hanging on the wall (yes, this can be a "thing"); where are most of your clothes kept (probably ditto for jewelry, unless there are so many jewels that "most" is meaningless :shock: ); where do most of your household staff *live*; etc.
I've occasionally read of some unexpected "checks" (obviously for ultra-high net worth/taxes people)... almost reminded me of the old-time college dorm "bed checks"!

It's a bit easier, as mentioned, if there are only two residences, or an arrangement where it is clear that you spend at least 50% of your days (and sleeping nights) at one specific home.
I'm less sure how they'd do the figuring for those who have several residences, and are not an any one of them anywhere close to 50% of the time.
Obviously, if you are registered to vote, that reflect "residency", but that is also part of the same question, right? How *does* one decide where to vote in those cases (especially with, dare I mention it, mailed ballots...).

RM
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Re: Crazy question - can two couples co-own a primary home?

Post by Isabelle77 » Fri Jul 31, 2020 5:26 pm

I would think you could. I actually know a couple (friends of my parents) who bought a retirement home with their best friends. Two masters, etc. and live there full time, it is a very large house. Sadly, one of the wives died very early on, but her husband continues to live full time with the couple. Works great according to all involved and it's been at least a decade now.

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Re: Crazy question - can two couples co-own a primary home?

Post by gtaylor » Fri Jul 31, 2020 5:55 pm

HomerJ wrote:
Fri Jul 31, 2020 2:38 pm
What if one couple got sued?

How is the equity in the house handled? How do you ensure 50/50 between two couples? What if we bought it 25/75? Curious what kind of issues that causes on the title.

Maybe the right move is for one couple to buy it 100%, and rent out a room to the other couple for 6+ months a year so they can establish residency.
I am not a lawyer, but I have co-owned a property in a not-50/50 ownership split with a non-spouse. The title structure is "Tenants In Common". Each tenant owns some specified fraction of the property, and can sell it, mortgage it, be sued for it, whatever. It is not JTWROS, the ownership does NOT transfer to remaining tenants in the even of death, the more common Joint title does do that and is therefore mostly suitable for spouses. It is not a condo, each owner has legal right to use the whole property, not just a separately titled (and taxed) unit plus defined common space.

My understanding is that this has become fairly common for groups living in larger homes in the SF bay area. In effect roommates who buy a house or big condo together as opposed to renting a place.

Mortgages are possible with this, but good luck finding a bank, I doubt the feds will buy the note. Maybe it's a commonly done thing and I just don't know.

A companion contract with some buy-out or refusal option for remaining tenants in forced sale / estate / similar situations would be desirable.

All of the above is mostly unrelated to taxes and especially residency. The share of tax liability and benefit (mortgage deduction etc) is defined by the ownership share in the title, 25%, say. The residency stuff is down to where you live, not how you own the place. This is entirely a function of whatever your state defines for non-resident vs resident vs partial year resident.

Discuss it with your real estate lawyer, there are state-specific details in all things legal.

retire57
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Re: Crazy question - can two couples co-own a primary home?

Post by retire57 » Fri Jul 31, 2020 6:00 pm

This scenario seems rife with endless potential legal and social implications. Here's one off the top of my head: the other couple separates, the woman stays in the house and finds a new partner.

One with a long criminal record, out on parole. For arson. And assault. What ya gonna do?
Last edited by retire57 on Fri Jul 31, 2020 9:59 pm, edited 2 times in total.

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Re: Crazy question - can two couples co-own a primary home?

Post by MarkNYC » Fri Jul 31, 2020 7:03 pm

HomerJ wrote:
Fri Jul 31, 2020 2:07 pm
If we bought a home with another couple, and both lived there 6+ months a year, could we both claim it as our primary home for state resident and state tax purposes?
Yes. A taxpayer does not have to be the sole owner or sole resident of a home in order for that home to qualify as the taxpayer's primary residence.

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