Transfer a Paid Off Home

I want to transfer my Mothers paid off home to me. How is this done? Will I have to pay some kind of income tax? Should I use a real estate agent or attorney? Would a quit claim deed work for this senerio?

1 Answer

The transfer of property from one person to another is typically done with a deed. There are different kinds of deeds. The decision of which type of deed that will accomplish your and your mother's objectives is best left up to a real estate attorney familiar with the laws of the state in which the property is located.

Quit claim deeds are typically used to make it explicit that a particular person does not have an interest in a property. So if your mother's objective is to say that she doesn't have an interest in a property that you do have an interest in it might be the appropriate instrument. If you don't already have an interest in the property then a quit claim deed may or may not transfer her interest to you. Again it depends upon the state in which the property is located. Contact a local title company. They can direct you to a real estate attorney that can answer these questions and prepare and file the correct instruments to accomplish your objectives. It is all relatively inexpensive and there is no excuse for not getting competent advice on a matter as important as this.

Regarding the tax consequences of this type of transaction. First there is no income tax due on the sale or transfer of real property. Your mother could owe capital gains tax on the sale of her property and in some jurisdictions tax on the transfer of property. Capital gains tax due would depend on what she paid for the property; how much she sold it for; whether and how much any improvements she made to the property cost; and most importantly whether she has lived in the home as her primary residence. These tax issues can be very complicated. Again it is relatively inexpensive to get advice from a CPA on the tax consequences of the sale or transfer of your mother's property. If she gifts you the property then there could be issues of gift or estate tax. This will probably not be a problem unless your mother has a very large estate. You may owe capital gains tax when you sell the property. How much again depends on the factors mentioned above and your basis in the property and whether you were using the property as your primary residence. It is in your best interest to find out the answer to these questions from a CPA or other competent tax adviser familiar with your specific situation before your mother transfers the property to you. Then you don't have to worry about nasty surprises that could have been avoided.