Deed to House

[Mark42]

Did anyone here ever add someone to their house Deed or were added to someone elses Deed?

I'm wondering if there are any capital gain taxes involved with being added to a Deed. From what I can find online, there is no mention of capital gains taxes, but I thought I'd ask before spending the money on an attorney to find out.

I was looking at the Quitclaim Deed and find no tax implications. But ya never know.....

 

[OldMercsRule]

Re: Deed to House

Did anyone here ever add someone to their house Deed or were added to someone elses Deed?

I'm wondering if there are any capital gain taxes involved with being added to a Deed. From what I can find online, there is no mention of capital gains taxes, but I thought I'd ask before spending the money on an attorney to find out.

I was looking at the Quitclaim Deed and find no tax implications. But ya never know.....

Hey Mark42, This is not a recomendation or advice, n' I only know a few things about taxes, (standard disclaimer) n' you know I have only one functional brain cell. That said: when you put someone elses' name on a house it is technically a 'gift' unless they gave cornsideration, (something of value). If they give cornsideration then a "taxable event' occurs for the selling party, (a capital gain or loss depending on that party's cost basis of the portion of the house deeded over). There is a certian amount that can be gifted each year w/o effecting things, (the figure was $11,000 per year when I left the securities business). If the value of the 'gift' exceeds the above mentioned amount, a persons lifetime estate exemption can be reduced, (so there would not be taxes due, but could effect the taxes due at the time the donor dies) depending on the value of the donors' total estate at the time of death.

There are a number of ways to structure ownership. For instance: in this State you can have Joint with right of survivorship, (which will transferr the entire property to the survivor at death), regardless of what the person's will says. Here in Washington titles can be held in a Tennents in Common format either 50% 50% or any other ownership the parties agree upon. With the Democrats now in corntrol of both houses of congress, and having stated that they intend to raise all of our taxes the estate tax provisions I am talking about 'sunset' in 2010. I believe the law then will revert back to the taxation methodology proir the the very favorable changes the Republicans put in.

Bottom line: You do need very specific advice from a tax attorney or a CPA, as there are significant cornsiderations to all aspects of such a transferr. Have ya cornsidered an LLC? Hope this helps ya with the basics. JR

 

[aspeck]

Re: Deed to House

First, I am no expert and anything I say cannot be held against me as my testimony would mean squat with the IRS. Now, to the best of my knowledge, it depends on who is added. If it is a spouse, then no, it would not have any tax implication. If it is someone else, then technically it is like giving them half of the value of the house and they would be expected to report that and the amount, less $11,000 - the amount of the yearly tax free gift contribution, would be taxable as income.

Now, you could "sell" the interest in the house with payments being $11,000 per year and those being gifted till the debt is paid at no consequence.

Or, you can just put the name on the deed and hope the IRS doesn't come checking. Chances are they would not, and nothing would ever be said, unless the original owner became in need of nursing care within 3 years of the transfer and the house became colateral for the payment of the care ... but that is a whole different issue.

Did I muddy it up any for you? I thought so.

 

[aspeck]

Re: Deed to House

Merky posted while I was typing - and what he said is good, and we are both saying about the same thing - just more detail in different areas. Bottom line though - get some CPA advice on what you are trying to do and why. In the end it will pay for itself.

 

[Mark42]

Re: Deed to House

Thanks for the input! I will end up talking to an attorney, but I wanted to get a "heads up" from anyone who had this experience.

Thanks again!

 

[OldMercsRule]

Re: Deed to House

Thanks for the input! I will end up talking to an attorney, but I wanted to get a "heads up" from anyone who had this experience.

Thanks again!

Hey Mark, One difference between the thoughts from the two laymen, (myself and Aspeck), is that I don't think the property transferr would be cornstrued as taxable income to the recipient unless it was an actual payment for some sort of service(s) performed by the recipient. If it is a gift, treat it as such, if it is a trade or a barter between parties there would likely be taxable events and cornsiderations to both parties. We did both agree that a professional with knowledge of State and Federal income and estate tax laws, and the exact intentions of the parties would be able to render precise advice. Do ask the pro about the practacle aspect(s), (play on words ) of using an LLC, as that works very well here in this Socialist tax hungry State of Washington. JR

 

[aspeck]

Re: Deed to House

Merky, my understanding, which is limited, is that it could be either - but you would have to decide how you wanted to do it. It could "reduce" the lifetime exemption amount for the gifter, OR be taxable income for the giftee. But someone would have to decide and make sure both parties are clear on how it would be handled ...

 

[OldMercsRule]

Re: Deed to House

Merky, my understanding, which is limited, is that it could be either - but you would have to decide how you wanted to do it. It could "reduce" the lifetime exemption amount for the gifter, OR be taxable income for the giftee. But someone would have to decide and make sure both parties are clear on how it would be handled ...

Hey Aspeck! If I understand what yer saying I probably agree with yer statement.

A gift can be disclosed and "gift tax paid" on the amount above $11,000, (and there are some strategies available to a pro like a CPA who could give advice to enhance that situation based on the particulars of this specific transaction), or the tax obligation could be differred by the reduction of the lifetime exemption: the choice lies with the doner. Generally, my philosophy is when in doubt: differ a tax obligation.

"Income" as apposed to a "gift" is a very different kettle of fish. I assumed we were discussing a gift, (but I can't read minds), so if the transfer is for payment of services rendered the above mentioned gift discussion would not apply at all. It would then be a sale of an assett, (with corresponding cost cornsiderations to determine the taxable impact for the seller), and fully taxable as current income to the receipient. We both do agree that Mark should seek competent advice and fully disclose all cornsiderations to said professional, as both you and I are just trying to be helpfull with our admittadly limited knowledge of these cormplicated matters. Respectfully, JR ps: The cost basis of potentially appreciated realestate assetts at the death of the owner is a huge potential tax benifit to ponder before using any so called 'backyard' transferr strategies, (that could save ya pennies today and cost thousands when the mistakes catch up with ya when a future significant event happens). Remember: Big Brother wants ya to sleep while doing this stuff so ya pay more taxes. Thank God we have all these Democrats lookin' out fer all of us: right? BTW most Pols are lawyers, n' know ya know why things are sooooooo cormplacated, (so ya need a lawyer to correctly position yer assetts to keep yer own stuff in the family and out of the treasury), real nice I say!!!

 

[aspeck]

Re: Deed to House

Yes, we are saying the same thing, only different ways. And the appreciated value at the death of the owner can be huge. That is what I am attempting to get my mother to understand right now. She wants to gift everything away now, but there are greater advantages to doing that after her death because of the appreciated cost basis at the time of death.

And personally, I think you need a good tax/estate lawyer AND a good CPA to get the job done right. Way too many loopholes and pages in the IRS code for one person to keep track of all!

EDIT: Back to the original question, if you do the transaction as a sale, and then gift the $11,000 per year there is no tax ramification (until the real sale of the property) to the giftee - and you have 1/2 of the property at a higher tax basis. And if it is the gifters primary residence there will not be capital gains.

See all the different scenarios? That is why you need to get competant advice for your particular situation - not from a couple of hacks like Merky and I! Just funnin' with ya, OldMerc - I know you have more intelligence in that one brain cell than I have in both of mine put together! HA!

 

[OldMercsRule]

Re: Deed to House

Yes, we are saying the same thing, only different ways. And the appreciated value at the death of the owner can be huge. That is what I am attempting to get my mother to understand right now. She wants to gift everything away now, but there are greater advantages to doing that after her death because of the appreciated cost basis at the time of death.

And personally, I think you need a good tax/estate lawyer AND a good CPA to get the job done right. Way too many loopholes and pages in the IRS code for one person to keep track of all!

Agreed: It's even worse when ya cornsider the ticking time bomb of a sunset date of current estate tax law imposed by our wonderfull Democrat buddies in congress, (just makes ya wanna send 'em a check fer corntinued support does it not)?

My dad just passed so RR island gets the benifit of the current law as it exists in 2007, but it would have gotten real REAL tricky under President Edwards in 2010 don't ya think: Aspeck?

Ya know if we all paid attention to n' suppoorted Boom's tax ideas we might be able to get rid of loads of CPAs n' Lawyers, (the government workers in the IRS), n' SIGNIFICANTLY diminish Washington DC's power over all of us. Somethin ta ponder fer those with at least one functional brain cell.

Respectfully, JR

 

[bjcsc]

Re: Deed to House

Man, look at murky slingin' the tech talk!

 

[aspeck]

Re: Deed to House

My dad just passed so RR island gets the benifit of the current law as it exists in 2007, but it would have gotten real REAL tricky under President Edwards in 2010 don't ya think: Aspeck?

Ya know if we all paid attention to n' suppoorted Boom's tax ideas we might be able to get rid of loads of CPAs n' Lawyers, (the government workers in the IRS), n' SIGNIFICANTLY diminish Washington DC's power over all of us. Somethin ta ponder fer those with at least one functional brain cell.

Respectfully, JR

Agreed, Merky. I try my hardest to keep up with tax and estate tax laws, and it just ain't no fun. I would really like to see the death tax eliminated and to either go to a flat tax, or a federal sales tax. But those have been discussed in other threads...

 

[OldMercsRule]

Re: Deed to House

Agreed, Merky. I try my hardest to keep up with tax and estate tax laws, and it just ain't no fun. I would really like to see the death tax eliminated and to either go to a flat tax, or a federal sales tax. But those have been discussed in other threads...

Yep. I jus' can never resist takin' a shot a Big Government!! The ol' brain cell is kinda stubborn from time to time n' particularly stuck on that corncept!! JR

 

[aspeck]

Re: Deed to House

I understand ... I am no fan of Big Brother either. Keep it as small as possible, I sez. Size does matter ... Xtra small! ...

So, how 'bout those Mariners?

 

[OldMercsRule]

Re: Deed to House

So, how 'bout those Mariners?

Hate ta admit it but don't follow 'em. Not a pro sports fan unless they are in the playoffs, (local teams only could care less about the rest of 'em). I follow me alma mater (University o' Washington) in football, n' go the the Rose Bowl when they go, been a few moons since they have. Fair weather fan at best. Too much to do rather then watchin' the tube or sitting in the stands, 'cept the Huskies. Me = Bad! JR