Community Property Advantage

Arizona is one of the few community property states in the nation, offering married couples a powerful estate-planning and tax advantage:
When one spouse passes away, both halves of the community property receive a full step-up in basis to fair market value.

That means capital gains on appreciated assets can effectively be erased, saving families hundreds of thousands — even millions — in potential taxes.

In community property states, most assets acquired during marriage are owned equally by both spouses.
Unlike separate-property states, Arizona law treats this shared ownership as a single economic unit, allowing both halves to be adjusted together at death.

Examples of community property include:

• Real estate purchased during the marriage
   
• Joint investment and brokerage accounts
   
• Family-owned businesses or LLC interests
   
• Personal property and vehicles acquired jointly
   

Assets owned before marriage or received by gift or inheritance can remain separate — unless combined with marital property.

When an individual dies, the IRS allows a step-up in cost basis to the asset’s current market value for capital gains purposes.
In most states, this applies only to the deceased spouse’s half.

But in Arizona, both halves of community property receive this adjustment.

• A couple buys a Scottsdale home for $600,000.
   
• Years later, the property is worth $1,200,000 when one spouse passes away.
   
• In most states, the surviving spouse would still have a $900,000 combined basis (half stepped up, half original).
   
• In Arizona, the entire basis is stepped up to $1,200,000 — eliminating all capital gains if the property is sold soon after.
   

This powerful rule protects surviving spouses from unnecessary taxes and allows wealth to transfer more efficiently and tax-free.

Arizona’s community property step-up applies broadly but is most valuable for:

• Real estate (primary residence, vacation, or investment properties)
   
• Business interests and LLCs held jointly by spouses
   
• Joint investment accounts or securities portfolios
   
• Rental properties with significant appreciation
   

Proper titling is critical — assets must be recorded as “Community Property with Right of Survivorship” or within a properly structured community-property trust to receive the benefit.

We ensure every couple relocating to Arizona maximizes this legal and tax benefit through our Estate and Domicile Alignment Program.

Our process includes:

1. Review & Assessment — Identify existing assets that qualify for community-property treatment.
    
2. Title Verification — Ensure deeds, accounts, and ownership records meet Arizona community-property standards.
    
3. Legal Coordination — Work with your estate attorney to retitle assets and update trust language.
    
4. Tax Strategy Integration — Collaborate with your CPA to track adjusted bases and model post-transfer capital gains.
    
5. Ongoing Compliance — Review new acquisitions annually to maintain the proper community-property structure.
    

This level of proactive coordination prevents costly mistakes and ensures that you receive the full tax benefit Arizona law provides.

•  Eliminates unnecessary capital gains taxes at the first spouse’s death
   
• Simplifies estate and trust administration
   
• Enhances overall family wealth preservation
   
• Combines perfectly with Arizona’s no state estate tax
   
• Creates immediate income tax advantages for surviving spouses
   

For high-value estates, this can mean hundreds of thousands in real savings — achieved automatically through correct planning and domicile alignment.

 Do I automatically get the step-up if I move to Arizona?
Not necessarily — your assets must be titled as community property under Arizona law. We help ensure all deeds and accounts are updated correctly.

What if my current estate plan is from another state?
We’ll coordinate with your estate attorney to update your documents and trusts to reflect Arizona’s community-property rules.

Can investment properties qualify?
Yes. Real estate and certain business assets titled jointly as community property can receive the same step-up in basis.

What if I’m not married?
The community-property advantage applies specifically to married couples. However, Arizona law still provides other estate and capital-gain benefits we can help you explore.

• Arizona is a community property state — one of only nine in the U.S.
   
• Married couples can receive a full step-up in basis on all community property assets.
   
• This step-up can erase capital gains and reduce estate tax exposure.
   
• Proper titling and legal coordination are essential.
   
• Parker Property AZ ensures your property, estate plan, and domicile all align to capture this benefit.
  pital-gain benefits we can help you explore.

Let Parker Property AZ structure your move and estate plan to take full advantage of Arizona’s community-property laws — protecting your family’s future and preserving every dollar you’ve earned. 

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