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Difference Between Joint Tenants and Tenants In Common

In property ownership, it’s common for multiple people to share a home. Whether as joint tenants or tenants in common, each person has a stake in the whole property. This means no one person exclusively owns specific parts; ownership is spread across the entire property. While joint tenancy and tenants in common have similarities, there are key differences.

Let’s break it down for you!

What is Joint Tenancy?

In joint tenancy, multiple individuals share equal, undivided interests in the entire property, like sharing a pizza where everyone gets an equal slice. If one owner passes away, their share automatically goes to the surviving owner(s) without the need for legal processes or probate.

This type of ownership is often preferred by couples or family members for a smooth property transfer in case of death.

What is Tenancy in Common (TIC)?

Tenancy in common (TIC) is yet another way of co-owning property where individuals own a share, but these shares can be unequal. Unlike joint tenancy, there is no automatic right of survivorship. Each owner can decide who inherits their share in case of death, typically outlined in their will.

Think of it like having a pizza where everyone has their own slices, and these slices can be different sizes. If one owner passes away, their share doesn’t automatically go to others; it becomes part of their estate and is passed on according to their will or local inheritance laws.

Difference between Joint Tenancy and Tenants in Common

Ownership Rights

In joint tenancy, everyone owns an equal share—like sharing a pizza where each person gets the same-sized slice. But in tenants in common, ownership shares can be different. Each person might own a certain percentage of the property, giving more flexibility.

Right of Survivorship

In joint tenancy, there is a right of survivorship. If one owner passes away, their share automatically transfers to the surviving owner(s). Tenancy in common, on the contrary, does not have a right of survivorship. If one owner dies, their share becomes part of their estate and is inherited by their heirs according to their will or local inheritance laws.

Inheritance and Transfer

In the case of joint tenancy, the property ownership smoothly transfers to the surviving owner(s) without going through probate. In tenancy in common, the deceased owner’s share does not automatically transfer; instead, it becomes part of their estate and is subject to the terms of their will or inheritance laws.

Decision-Making Authority

In joint tenancy, decision-making and control are typically shared equally among joint tenants. Each owner has an equal say in matters related to the property. In tenants in common, decision-making and control may not be equal, as ownership percentages can vary. Larger ownership shares may have more influence in decision-making.

Joint Tenancy vs. Tenants in Common: Comparison Chart

Summary

In simple terms, joint tenancy is like a smooth transition of ownership when someone passes away. On the other hand, tenants in common offer more flexibility in ownership shares, and each person’s share becomes part of their estate if they’re no longer around. Understanding these differences is crucial for those thinking about co-ownership, helping them pick the arrangement that suits their preferences and goals.

FAQs

What is better, joint tenancy or tenants in common?

Joint tenancy is often preferred for its seamless transfer of ownership upon death and is suitable for couples or family members. On the other hand, tenants in common provide more flexibility in ownership percentages and inheritance plans.

What are the disadvantages of tenants in common in Ontario?

In Ontario, tenants in common may face challenges related to the lack of a right of survivorship. This means that the transfer of ownership isn’t automatic upon death, potentially leading to complexities in the distribution of the deceased owner’s share.

What is the best tenancy for a married couple?

For a married couple, joint tenancy is often preferred due to its simplicity and the automatic transfer of ownership to the surviving spouse.

What do tenants in common mean in Ontario?

In Ontario, tenants in common refers to co-ownership where individuals hold unequal or equal shares in a property. Unlike joint tenancy, there is no automatic right of survivorship.

What is the difference between joint tenancy and tenants in common in Canada?

Joint tenancy includes an automatic transfer of ownership to surviving owners, while tenants in common lack this feature, allowing for more customized ownership percentages and inheritance arrangements.

Do joint tenants pay capital gains tax?

Joint tenants are generally exempt from capital gains tax when one owner passes away.

What happens to the principal residence at death in Canada?

When an individual passes away, their principal residence is considered to be disposed of at fair market value. However, the tax on any capital gains may be deferred until the property is eventually sold by the deceased’s estate or heirs.

How to avoid paying capital gains tax on inherited property in Canada?

To do that, heirs may consider designating the property as their principal residence, using the principal residence exemption. Seek professional advice to learn more about it in details.

What is a tenancy in common estate for a deceased person?

A tenancy in common estate for a deceased person refers to the ownership structure where the deceased held a share in a property with others. In this scenario, the deceased’s share becomes part of their estate and is distributed according to their will or local inheritance laws.

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[0]Image credit: https://www.canva.com/photos/MAEJPYWmjdk-apartment-tenants/

[1]Image credit: https://www.canva.com/photos/MADPr7MnDZg-tenant-agreement/

[2]Burris, Rachel. “Joint Tenancy: Definition, Pros And Cons.” Rocket Mortgage, 13 July 2023, www.rocketmortgage.com/learn/joint-tenancy.

[3]Chism, Patrick. “Tenancy In Common, Explained.” Rocket Mortgage, 22 Feb. 2023, www.rocketmortgage.com/learn/tenancy-in-common.

[4]McCall, Melissa. “What's the Difference Between Joint Tenancy and Tenancy in Common?” FindLaw, 12 Sept. 2023, www.findlaw.com/realestate/buying-a-home/difference-between-joint-tenancy-and-tenancy-in-common.html.

[5]Chen, James. “Tenancy In Common (TIC) Explained: How It Works and Compared to Joint Tenancy.” Investopedia, 22 Dec. 2023, www.investopedia.com/terms/t/tenancy_in_common.asp.

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