Posted on: 28th Dec, 2005 09:16 am
What are the tax implications of a Quit Claim? Who pays the property tax?
Thank you.
Thank you.
Welcome Humbrace,
You will get to know about the lifetime gift tax exemption from the page referred by me in the very first post of this page.
You will get to know about the lifetime gift tax exemption from the page referred by me in the very first post of this page.
I have a home in CA with a mortgage, my mom came into some money and wants to pay off the loan. Since I am married and things happen, she wants me to quit claim her the property. So my Question is 1. Does she pay off my loan then quick claim it. 2. does the house get reappraised. 3. Is gift taxes involved when I give it to her or vice versa, when she gives it back.
I still owe her the balance of the mortgage so do I have to pay capital gains if she pays of the mortgage?
"Is gift taxes involved when I give it to her or vice versa, when she gives it back."
When a person quit claims his property (known as the grantor) for a consideration less than its current value then it is considered as a gift made to the other person.
As such grantor has to pay gift taxes if required. And gift taxes become due only when gift tax exemption limits are crossed. The annual gift tax exemption limit is $12,000 which means every year you can gift up to this exemption limit without having to think about gift taxes.
But when the value of the gift exceeds this annual limit then it become necessary to calculate whether lifetime gift tax exemption limit which is $1 million has been crossed or not.
If has not been crossed then also you don't have to pay any tax even if the value of gift made is more than the annual exemption limit.
When a person quit claims his property (known as the grantor) for a consideration less than its current value then it is considered as a gift made to the other person.
As such grantor has to pay gift taxes if required. And gift taxes become due only when gift tax exemption limits are crossed. The annual gift tax exemption limit is $12,000 which means every year you can gift up to this exemption limit without having to think about gift taxes.
But when the value of the gift exceeds this annual limit then it become necessary to calculate whether lifetime gift tax exemption limit which is $1 million has been crossed or not.
If has not been crossed then also you don't have to pay any tax even if the value of gift made is more than the annual exemption limit.
"I still owe her the balance of the mortgage so do I have to pay capital gains if she pays of the mortgage?"
Capital gain taxes are to be paid if the house is sold for a profit. But you will not be making any profit by transferring property interest in your mother's name. So you will not have to pay any capital gains tax.
Capital gain taxes are to be paid if the house is sold for a profit. But you will not be making any profit by transferring property interest in your mother's name. So you will not have to pay any capital gains tax.
" 2. does the house get reappraised. "
Hi Eric,
In California, transfer of property between children & parents is excluded from reappraisal for property tax purposes.
But you will have to file an application with the assessor's office. Your application is required to determine if this property transfer would be eligible for the allowed exclusion.
Thanks
Blue
Hi Eric,
In California, transfer of property between children & parents is excluded from reappraisal for property tax purposes.
But you will have to file an application with the assessor's office. Your application is required to determine if this property transfer would be eligible for the allowed exclusion.
Thanks
Blue
my loan officer says it would be easier for me to get a loan for a rental with just my name and then transfer it with a quick deed to my other person that wants to share the rental with me. Can the other person take the interest off their taxes?
"my loan officer says it would be easier for me to get a loan for a rental with just my name and then transfer it with a quick deed to my other person that wants to share the rental with me. Can the other person take the interest off their taxes?"
Brenda, the other person can only take the interest off his taxes if he is on the loan. If that person is not named on the loan then he will not be able to claim interest deductions.
Miller
Brenda, the other person can only take the interest off his taxes if he is on the loan. If that person is not named on the loan then he will not be able to claim interest deductions.
Miller
I signed and took out a mortage with my son. Now I want to give him the house. I know I will still be on the mortage but can I take my name of the deed.
Hi Ponte,
You can take your name from the deed by using a quitcliam deed. In the deed, you will sign as the grantor and give away the property to your son who will be the grantee. And thus can transfer the ownership rights of property back to your son.
But to get out of the mortgage, you need to talk to the lender. And if he agrees to it, your son will be able to refinance the loan in his name solely.
You can take your name from the deed by using a quitcliam deed. In the deed, you will sign as the grantor and give away the property to your son who will be the grantee. And thus can transfer the ownership rights of property back to your son.
But to get out of the mortgage, you need to talk to the lender. And if he agrees to it, your son will be able to refinance the loan in his name solely.
i'm looking to purchase a home from my parents that is completely paid for. they only desire to get back what they purchased it for, not what it is currently valued at. is there any benefit to them to transfer their interest through a quit claim deed, rather than do a normal purchase of the property? thanks!
Hi Mark and Barb,
I think you have asked a similar question earlier in the forum. There I've replied to you. To view the reply, please refer to: http://www.mortgagefit.com/property/quitclaim-purchase.html
I think you have asked a similar question earlier in the forum. There I've replied to you. To view the reply, please refer to: http://www.mortgagefit.com/property/quitclaim-purchase.html
cant a qit claim deed stop a foreclosure on my property at least for a month until I get de payments together?
Hi Elssy,
Quit claim deed only transfer property interest. It cannot stop lender from foreclosing. The house is the collateral for the mortgage and in case of default he has the right to foreclose and sell the house to recover his dues.
If you are facing problems with the payments then inform the lender about it first. It is possible that lender would agree to receive payments for two months together when you regain financial stability. Another thing is that lenders do not normally select to foreclose if the borrower is in default for just one month, they generally wait for 3 months before considering foreclosure as an option.
Quit claim deed only transfer property interest. It cannot stop lender from foreclosing. The house is the collateral for the mortgage and in case of default he has the right to foreclose and sell the house to recover his dues.
If you are facing problems with the payments then inform the lender about it first. It is possible that lender would agree to receive payments for two months together when you regain financial stability. Another thing is that lenders do not normally select to foreclose if the borrower is in default for just one month, they generally wait for 3 months before considering foreclosure as an option.