Posted on: 19th Oct, 2006 11:41 am
a friend of mine living in california has recently broken up from her 9 year relationship with her boyfriend. they purchased the house together 6 years ago at about $180k. she recently got her ex to sign a quit claim deed over to her and she had it filed with the county recorder. the house at this point is worth approximately $600k.
california does not have a gift tax as i\\\'ve read.
with the equity on the house being upwards of 400k what are the tax implications of this transaction.
things i\\\'ve taken into consideration but need clarification on:
- there will be a federal gift tax.
- the house will be reassessed for property tax purposes.
- a novation can be filed with the lender upon approval to secure the existing mortgage with no changes to the mortgage except to remove his name.
if someone is familiar with the process that needs to be followed now that the quit claim has been recorded that would be greatly appreciated.
thank you.
california does not have a gift tax as i\\\'ve read.
with the equity on the house being upwards of 400k what are the tax implications of this transaction.
things i\\\'ve taken into consideration but need clarification on:
- there will be a federal gift tax.
- the house will be reassessed for property tax purposes.
- a novation can be filed with the lender upon approval to secure the existing mortgage with no changes to the mortgage except to remove his name.
if someone is familiar with the process that needs to be followed now that the quit claim has been recorded that would be greatly appreciated.
thank you.
Hi,
As far as I know your friend's husband would be liable to pay the federal gift taxes if any as he has transferred his interest in your friend's name through quit claim deed.
As far as I know your friend's husband would be liable to pay the federal gift taxes if any as he has transferred his interest in your friend's name through quit claim deed.
"A novation can be filed with the lender upon approval to secure the existing mortgage with no changes to the mortgage except to remove his name. "
You are quite right; if the lender agrees then novation is a suitable option to transfer the mortgage in her name. She will have to contact the lender to know if he will allow it or not.
You are quite right; if the lender agrees then novation is a suitable option to transfer the mortgage in her name. She will have to contact the lender to know if he will allow it or not.
Hi Guest,
"There will be a federal gift tax.
The house will be reassessed for property tax purposes"
California does not charge a federal gift tax for transfer of property.
Under the California laws, real property is not reassessed on an annual basis but only when there is a change in the ownership of the property. If the property is transferred to a spouse or to a trust for the spouse, then there is no reassessment. But your friend never married the person who has transferred her the property. So the property may be reassessed for property tax payments.
I would suggest that you consult a tax advisor.
"A novation can be filed with the lender upon approval to secure the existing mortgage with no changes to the mortgage except to remove his name."
Yes, novation can be a good option to remove the person's name from the loan.
Thanks,
Caron
"There will be a federal gift tax.
The house will be reassessed for property tax purposes"
California does not charge a federal gift tax for transfer of property.
Under the California laws, real property is not reassessed on an annual basis but only when there is a change in the ownership of the property. If the property is transferred to a spouse or to a trust for the spouse, then there is no reassessment. But your friend never married the person who has transferred her the property. So the property may be reassessed for property tax payments.
I would suggest that you consult a tax advisor.
"A novation can be filed with the lender upon approval to secure the existing mortgage with no changes to the mortgage except to remove his name."
Yes, novation can be a good option to remove the person's name from the loan.
Thanks,
Caron