QUESTION
How do we transfer a property deed to our son?
Asked on Mar 02nd, 2014 on Estate Planning - Louisiana
More details to this question:
My husband and I own a condo that my son stays at while going to college. We would like to transfer the deed in his name so when he graduates he can sell the condo and put the money down on a home. Who would be responsible for the appreciated value (taxes) on property when sold? Is there a way to transfer the capital gain to his new home if he purchases the home and sells the condo within a certain time frame?
14 ANSWERS
If you transfer ("gift") your condo to your son during your lifetime, then your son will inherit your cost basis. However, tax law essentially provides that an unmarried person can treat as tax free up to $250,000 of the profit from the sale of his primary residence provided he owns and lives in the home for two years. The gift tax matter, on the other hand, is a separate issue. You and your spouse can each gift up to $14,000 per year per beneficiary without incurring any gift tax consequences. Assuming the value of the condo exceeds this amount, when you transfer the condo to your son, you will be legally required to file a gift tax return reporting the gift. Although you most likely will not be required to pay any gift taxes, the transfer will cut into your lifetime gift tax exemption. I would encourage you to speak with both an estate planning attorney and a CPA prior to transferring ownership of your condo to your son.
Answered on Mar 11th, 2014 at 5:22 AM
Probate Attorney serving St. Louis, MO
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Edward L. Armstrong, P.C.
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Is your son at least 18 years of age? If he is you can deed the condo to him. The deed must be recorded in the Recorder of Deeds office for the county in which the condo is located. This will be a gift from you to your son and you must file a Gift Tax Return (Form 709). You won't have to pay any gift tax as the exemptions are very high. Your son will then have a basis in the property (for purposes of computing the gain on sale) equal to the amount that you paid for it ("carryover basis"). When he sells the property he will have to include any gain on the sale on his tax return for the year in which the sale occurs. Before you do this you should consult a tax/estate planning attorney as there are other considerations than just the income taxes on the gain. If you give the property to your son (who is over 18 years of age) it is then his and he will be free to use the condo as collateral for a loan or for any other purpose that a condo could be used for.
Answered on Mar 10th, 2014 at 4:41 AM
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You are asking complicated estate planning questions that should be part of a comprehensive estate plan and conversation. Transferring it may very well result in tax consequences and is not something you want to do without specific advise. See an attorney.
Answered on Mar 10th, 2014 at 4:41 AM
It is pretty easy to transfer the title to your son. You make a Deed from you to him. The condo board may need to approve him for ownership. Check your condo documents. When he sells the condo all of the gain will be taxed to him; however, if he owns it for two years, he can avoid up to $250,000 of the gain.
Answered on Mar 10th, 2014 at 4:40 AM
Edwin K. Niles
There are issues of income tax as well as property tax; we think it's a bit too complex for this forum.
Answered on Mar 07th, 2014 at 9:31 PM
Business Planning Attorney serving Livonia, MI
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Frederick & Frederick Attorneys at Law
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There are a number of considerations, here. Transferring the home to your son would trigger gift taxes. You would need to file a Form 709 with the IRS. Your son would not need to recognize gain, provided he lives there for more than 2 years. There could be other issues, as well, so I would suggest you have an attorney assist you with this.
Answered on Mar 07th, 2014 at 9:30 PM
Trusts Attorney serving Sacramento, CA
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Law Office of Victor Waid
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First, you can use a grant deed transferring title to son at anytime, suggest you wait until son graduates and make a gift to him, and claim a gift tax exemption. Secondly, as to any capital gain's, you should consult with a CPA for advice.
Answered on Mar 07th, 2014 at 6:54 PM
Whoever is the owner at the time of the sale is liable for the capital gain. Since you are giving him a gift, he takes the home with your basis in it. I assume that he does not have to worry about the alternative minimum tax but you might. I believer the Federal rule is that if he uses all the money to buy a new home within one year of the sale of the home and he has lived there as his principle residence three of the last five years, the he can roll over the gains into the new house and not have to pay capital gains tax. But his bases will remain what your basis was; if the house appreciates in value, it might be better for him to pay the tax when he buys the new home and increases his basis. Your decision will also depend upon what tax bracket he will be in when he sells the condo. Since doing this the wrong way can cost you a fair amount of money, it is worthwhile to spend an hour or so with a tax attorney to determine what is the best approach.
Answered on Mar 07th, 2014 at 5:24 PM
Probate Attorney serving Newport, OR
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Minor, Bandonis & Haggerty P.C.
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You make, execute and deliver a deed transferring the condo to your son. Be careful this doesn't change his status with respect to financial aid for college. This is a gift to your son in the amount of the fair market value of the condo. A gift tax return may have to be filed. When he sells the property, he will realize capital gain to the extent of the difference between the sale price less expenses and YOUR basis in the property. If it is his principal residence when he sells, he may be able to exclude gain on the sale. Talk to your tax advisor and your estate planning lawyer before doing this. There are many reasons why this may not be the best idea.
Answered on Mar 07th, 2014 at 4:12 PM
Commercial Contracts Attorney serving Boise, ID
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Peters Law, PLLC
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You have some intricate tax questions that cannot be answered over the internet. As for the transfer, you just give him a deed to the property. I suggest using a local attorney to prepare the deed. As for the tax issues, consult either with your accountant or a tax attorney to help you figure it out. There may be some gift tax implications if the equity in the condo is large.
Answered on Mar 07th, 2014 at 4:09 PM
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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When you give it to him, you must file a gift tax return. When he sells, he must pay the tax on the entire gain. He can exclude up to $250K of gain IF he lives in it for at least 2 years after you give it to him and before selling.
Answered on Mar 07th, 2014 at 4:09 PM
Commercial Attorney serving Chicago, IL
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Ashcraft & Ashcraft, Ltd.
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There is an exclusion of gain on the sale of a principal residence (up to $250,000 for a single person) for a five year period ending with the sale of the principal residence. The person must have used (occupied) the property for a period of two years before the sale. Your son must be the owner of and occupy it as a principal residence for two years. If you gifted the property to your son he would take the property with the basis you had in the property. You would have to report the gift by filing a gift tax return. The value would apply against your gift tax credit. Gross income does not include gain realized .1 from the sale or exchange of property ( I-4521.1) if, during the five-year period ending on the date of the sale or exchange, the property has been owned and used by the taxpayer as the taxpayer's principal residence ( I-4522 et seq.) for periods aggregating two years or more.
Answered on Mar 07th, 2014 at 4:08 PM
Probate Attorney serving New Orleans, LA
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James G. Maguire
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Donate the condo to your son. The value would count against your lifetime gift exclusion ($5 million) but that should not be a problem. If there is any increase in value between the date of the donation and the date he sells the condo, that will not be taxable as long as he uses the proceeds to purchase another home.
Answered on Mar 07th, 2014 at 4:06 PM
It would be simple to give him a Grant Deed to the property. You would be responsible for the gain and there would also be estate tax consequences as the home value would count against your total estate. If you put the home in trust for him, he would be able to get the basis stepped up to present value when you and your husband pass away. If the home is his primary residence he can exempt $250,000 of gain in certain circumstances.
Answered on Mar 07th, 2014 at 4:06 PM