Photo Credit: Andy Dean via Adobe Stock

Many of us want a partner to share our lives and homes. For some, sharing a home means adding a partner as co-owner of a home owned before the relationship. This is a great way to recognize your relationship and provide security for your partner, but is it right for you?

Gift Tax

Although many people talk about “adding their partner to the deed,” what they’re really doing is giving away partial ownership of their property to their partner. This is a gift that could be subject to federal gift tax.

A gift worth more than the annual exclusion amount ($15,000 in 2021) to anyone other than a spouse triggers the obligation to file a gift tax return. It also either chips away at your lifetime exclusion amount (the amount that you can give away free of federal gift and estate taxes during life and at death, $11.7 million in 2021), or, if you’ve already exhausted that, results in tax due at rates up to 40 percent.

For example, if your home is worth $200,000 and you “add your partner to the deed,” then you’ve made a gift worth $100,000. Subtract the annual exclusion amount of $15,000 and that leaves a taxable gift of $85,000. If you haven’t exhausted your lifetime exclusion amount, then that’s $85,000 less that you can give away during life or leave behind at death without owing gift tax or estate tax; otherwise, the gift tax could be $34,000.

Selling part of your home to your partner for a token amount won’t help you avoid the gift tax. Any “sale” for less than full market value is considered a gift to the extent that the fair market value of the property exceeds the “sale” price.

For example, if your home is worth $200,000 and you “sell” half of it to your partner for $5, then you’ve exchanged property worth $100,000 for $5, resulting in a gift of $99,995, which doesn’t make much of a dent in the hypothetical gift tax described above.

A way around this is to marry your partner, because gifts to a spouse are not taxable. Another way around this is to make a will and/or trust giving the home to your partner after your death.

Mortgage Default

If you borrowed money to buy your home, then you have a promissory note and a mortgage. The promissory note obligates you personally to repay the loan and allows the lender to sue you if you don’t. The mortgage makes your home the collateral for the loan and allows the lender to repossess the property if the loan isn’t repaid. Failure to pay is referred to as “default,” but that’s not the only thing that counts as a default. Your promissory note probably defines “default” to include giving away partial ownership of your home. Unless you refinance the loan to include your partner as a borrower when you give them partial ownership of your home, the lender can probably call the loan due and require you to repay the remaining balance immediately.

There are a few ways around this. You could: (1) pay off your mortgage and then give partial ownership to your partner, or (2) simultaneously refinance with your partner and give them partial ownership. Those won’t get you around the gift tax issue, though. Another way around this is to make a will and/or trust giving the home to your partner after your death.


No one likes to consider the possibility that their relationship could end, much less on a sour note, but we all know that it happens. If you’ve given away partial ownership of your home to your partner, then you can’t just take their name off the deed if you break up; they have to give their partial ownership back to you, triggering gift tax consequences as previously described.

If you and your partner refinanced together when you gave them partial ownership, then giving partial ownership back to you would leave your (now ex) partner responsible for the mortgage without any ownership of the home to show for it.

A way around this is to make a will and/or trust, which you can change whenever you want, that gives the home to your partner after your death.

Disinheriting Children

There are two types of co-ownership available to unmarried co-owners. The default is Tenancy in Common (TIC). If you co-own your home in TIC with your partner, then only your part ownership will pass at your death to your beneficiaries by intestacy or under your will, while your partner will continue to own their part ownership of the home.

Another type is Joint Tenancy with Right of Survivorship (JTWROS). To elect it, your deed must contain specific wording. If you co-own your home in JTWROS with your partner, then your part ownership will automatically pass to your partner; it does NOT pass to your beneficiaries by intestacy or under your will. After your death, your partner could sell the home, give it away, or make a will to leave it to whomever they want, excluding your other family members.

A way around this is to make a will and/or trust giving the home to your partner after your death for life and then to your children or other beneficiaries after your partner’s death.

Other Issues

This article discusses only North Carolina law and federal law applicable in North Carolina; other states’ laws might be different. There could be other tax consequences that are beyond the scope of this article. Spouses have many automatic protections; they’re beyond the scope of this article, but I wrote about them in the Dec. 1, 2017 issue of qnotes. Unfortunately, unmarried partners have no such automatic protections.


It’s a natural instinct to protect those closest to you, including ensuring that your partner has a home after your death, but you should do so thoughtfully, fully aware of your options and their consequences.

Copyright 2021, Justin R. Ervin, III; all rights reserved.

Justin R. Ervin, III practices with the law firm of Johnson, Peddrick & McDonald, PLLC in Greensboro, where he ended up after growing up in Rockingham, and is an adjunct professor of law at Elon University, his legal alma mater. Licensed to practice law in North Carolina and Florida, Justin’s practice focuses on estate planning, estate administration and adult guardianships. Justin enjoys working with all sorts of clients and has a particular affinity for serving queer individuals and families, as well as immigrant families. Justin is open and active in the local queer community, having served on the Board of Directors of Guilford Green Foundation and LGBTQ Center. Justin regularly volunteers at pro bono estate planning events and has also served on the boards of directors of Benevolence Farm, the Greensboro Estate Planning Council and the Greensboro chapter of the Society of Financial Service Professionals.

Join us: This story is made possible with the help of qnotes’ contributors. If you’d like to show your support so qnotes can provide more news, features and opinion pieces like thisgive a regular or one-time donation today.