Sacramento, CA · Member since 2009 · 42 posts · 0 votes
The property is located in California.
I am filling out a quit claim deed for property that my brother and I have in joint tenancy. He will quit claim deed his portion to me.
1)
For the transfer tax calculation, I believe I use 1/2 the property FMV. So if the transfer tax rate is $0.55 per $1,000 and the property is worth $200k, than the transfer tax would be ($200k/$1k) * $0.55 = $110.
2)
If no money is transferred, does the basis for the property stay at the original purchase price of $150k? Or does the basis go down to $75k?
Good question! I have not made transfers like that in Cali, so I can't advise. Your assumptions are logical to me, but being logical does not mean compliance in many tax issues. I'd suggest you actually call the state department of revenue and get an answer from them if it is not in the state tax law. There may also be instructions of the form required to submit.
This is not such a common situation between familt members that investors would be involved in, so unless a tax accountant/CPA chimes in, I'd ask the state.
I thought this situation would be somewhat common since there are transactions between siblings related to property that occur. I believe the transaction would be considered a gift if no money is transferred and it would use part of the lifetime gift tax benefit. Under that rule the original property basis would be transferred to the person receiving the gift, which hopefully is the case.