Quit Claims and Options after being put on a title

7 Replies

Hi BP!

Been lurking for the last year and wanted to finally post with some knowledge after reading some books and following the podcast and forums. I spoke with my mom and she wants advice on what the best option to get our property off of her hands. She is currently the only one on the title of the house I grew up in but is retired and lives in the Philippines. She was wondering what would be the best option to have me manage the property. She doesn’t want to wait until she’s gone for me to inherit it so she looked into a quit claim to where she can add me on the title. That said, if I were to be added to the title, could I subsequently get a mortgage on the property to do a couple things like pay off her heloc, do renovations, invest elsewhere to grow that money she has tied up. She has other properties so she is ok with giving me the reigns on this one.

Anyone have advice on this scenario or any other alternative options that I could look into?

Thanks in advanced!

Originally posted by @Ver Andrew Starr :

Hi BP!

Been lurking for the last year and wanted to finally post with some knowledge after reading some books and following the podcast and forums. I spoke with my mom and she wants advice on what the best option to get our property off of her hands. She is currently the only one on the title of the house I grew up in but is retired and lives in the Philippines. She was wondering what would be the best option to have me manage the property. She doesn’t want to wait until she’s gone for me to inherit it so she looked into a quit claim to where she can add me on the title. That said, if I were to be added to the title, could I subsequently get a mortgage on the property to do a couple things like pay off her heloc, do renovations, invest elsewhere to grow that money she has tied up. She has other properties so she is ok with giving me the reigns on this one.

Anyone have advice on this scenario or any other alternative options that I could look into?

Thanks in advanced!

You are probably best off waiting to inherit the property.  Since she no longer lives in the property she may have serious taxes to pay if she sells the house, even to you. Consult a CPA for specific information. You could lease option the property from her with the option set up to be extended and avoid a lot of the taxes. Consult with a real estate attorney.

 

@Account Closed Thanks for the insight! I definitely need to speak with an attorney or CPA. The quit claim wouldn’t be a sale I don’t think. But I guess that’s where my lack of understanding on the legality of it is. Essentially we are trying to get her loan paid off and onto me AND with better terms. We have a tenant in place as well

Originally posted by @Ver Andrew Starr :

@Mike M. Thanks for the insight! I definitely need to speak with an attorney or CPA. The quit claim wouldn’t be a sale I don’t think. But I guess that’s where my lack of understanding on the legality of it is. Essentially we are trying to get her loan paid off and onto me AND with better terms. We have a tenant in place as well

You can Quit Claim you onto the property, but you may choose not to once you've discussed future capital gains taxes with a CPA. It won't be considered a sale if your mom stays on the title. However, at some point in the future at her passing, since you will already be on title you may not qualify for the "stepped up value" of the property and that may cause a large taxable event.

The Loan and Ownership are two different things.

As for the loan, you may be able to Quit Claim on, which doesn't put you on the loan or have anything to do with putting you on the loan. Only she will still be on the loan (and from your comments I think you already understand this, but I write this out in more detail for clarity for others reading this that are interested in this issue). Quit Claim deeds only deal with ownership - not loans.

Once you are on the loan there may be a lender that will do a loan in your name, paying off your mother's loan. If that is your goal, then you need to also talk to a mortgage broker and see if you and the property qualify for financing under that scenario before you Quit Claim on to be sure you can qualify for financing and that the underlying loan will be paid off in full.

@Account Closed I’ll reach out to some advisors on the scenario for sure. I’m not gonna be put on her loan but just the title in addition to her.

From my research, that seems to be the best option but maybe there is another. Any CPAs or attorneys who can chime in?

Look at doing a lady bird deed instead.

The property will still be owned by your mother, but at her death it will be automatically transferred to you without probate and you will also keep the step up basis.

Unfortunately after looking it up, I don’t believe that lady bird deed is available in your state.