How to Transfer Property from Family

Question

Hi All! I have an family member that's willing to put me on title of his property, however, we don't know if there is any taxes that are due with this kind of transfer. It's paid off and we're thinking of just doing a quit claim deed.

Does this trigger anything with the IRS?

Basit Siddiqi · Answer

@Rik PatelAs others have mentioned, if this is a 'gift', then there may potentially be a gift tax filing requirement on the giftor.If you will now own the property as tenants in common upon added you to title.You may be required to report the rental income if the property is a rental.You may be required to report the income if the property is sold shortly thereafter.You want to keep track of what your 'basis' is in the property as that will be important when you dispose of your interest in the property.

Bill B. · Answer

If it’s worth more than $15-$16k there’s a gift tax consideration. But that’s on the giver, not the receiver. They can declare it as part of their lifetime estate gift limit. It that is also on them. You should be golden no matter what they do. As long s it’s free from liens, liabilities and lawsuits.

Rik Patel · Answer

Their CPA is telling them they can declare it as part of their lifetime estate gift, however, they're still subject to a gift tax?

Jason Wray · Answer

Rik,

If you or your family member is looking to get some cash in hand from that sale/transfer the best way to handle that transaction is by doing a "Gift of Equity" purchase.  That way you can use the equity for the down payment and the closing costs which is the same as a refinance.  Gift of equity is a lot easier than dealing with the IRS considering you can gift over a Million before you start having issues.Giving away more than $15,000 requires you to complete a federal gift tax return, though you don't actually have to pay any tax until your combined lifetime gifts (in excess of the annual exclusion) exceed the lifetime gift tax exclusion, which is $11.70 million in 2021 (up from $11.58 million in 2020)

Rik Patel · Answer

This is interesting, how does the process work? Let's say they were to sell the property for $0, which is 100% equity. Isn't this process the same as putting myself on the title and having 100% equity?

Deanna O. · Answer

Your CPA should know what they are talking about (that whole license thing), but not every CPA specialized in RE -- sometimes a consultation with a RE attorney or RE tax specialist is worth the $$$. There might be other ways to accomplish what you want. If this relative is a senior, make sure you don't run afoul of elder abuse laws or medicare claw-back timelines. You have your RE license, so courts are super-critical of anything that looks like you are taking advantage of anyone (even your Mom).