Posted on: 03rd Jun, 2009 03:02 pm
I have tried and tried to figure out just what is the best way to take care of a property transfer. My Dad owns outright the home/property that I now live in/on. He is getting up in age and wants to leave me the property/house (my sister has other family property that he wants to go to her). Question: After reading and re-reading what would be the best way to do this: warranty, quitdeed, etc. I am more confused then ever. We do not want this property to go into probate, there is no liens, mortgage, etc. on it....I have been living here for years. His residency is elsewhere and we both live in the same state. Should he merely have me to inherit it in his Will, should he transfer the property to me prior to this death in a deed, and if so what kind? Should we do a Warranty Deed with a life estate for him (so he can "control" it until he passes away and then it goes to me without going through probate? Is there going to be a Gift Tax attached to it? I don't think that I would have to pay an inheritance tax since I would, with a Warranty Deed own it prior to his passing or am I wrong? I plan on continuing to live in the home so there shouldn't be any capital gains on the property unless I sell it int he future, right? I would like to do this soon, and not have to pay a lawyer, but I want to get it right and not have problems in the future.
Hi Guest,
You have mentioned that there is no mortgage or any other type of liens on the property. In such a situation, you can ask your father to sign a warranty deed and transfer the property to you. If your father transfers the property to you as a gift, then he may have to pay a gift tax. Your father can contact a tax assessor and he may help him in this regard. As far as the capital gains tax is concerned, you will have to pay it when you sell off the property.
Thanks
You have mentioned that there is no mortgage or any other type of liens on the property. In such a situation, you can ask your father to sign a warranty deed and transfer the property to you. If your father transfers the property to you as a gift, then he may have to pay a gift tax. Your father can contact a tax assessor and he may help him in this regard. As far as the capital gains tax is concerned, you will have to pay it when you sell off the property.
Thanks
yes.
Warrant deed can be used for transfer purpose.
Warrant deed can be used for transfer purpose.
Thank you for the update info. Question: Does the Warranty Deed transfer have to be a gift so that there has to be a gift tax involved or can there be a small monatary amount, such as $10.00 on the Warranty Deed so that it is not a gift? (kind of like when you "gift a car" to someone and there is a small amount place on the DMV form, and no tax/fees involved in the transaction between myself and one of my kids that gets the car. thanks again for your help,
Note: I also am wondering since the Estate/Inheritance tax allows someone to inherit up to 3.5 million without having to pay any taxes...and this applies to my perspective inheritance dollar amount....should I not do the Warranty Deed and just make sure that in my Dad's Will I inherit the land/house, or is the Warranty Deed, with a life estate for my Dad the best, financial way to go?
Note: I also am wondering since the Estate/Inheritance tax allows someone to inherit up to 3.5 million without having to pay any taxes...and this applies to my perspective inheritance dollar amount....should I not do the Warranty Deed and just make sure that in my Dad's Will I inherit the land/house, or is the Warranty Deed, with a life estate for my Dad the best, financial way to go?
Hi JRS!
Welcome to forums!
Though you transfer the property through a warranty deed, you'll still have to pay the gift taxes. You can definitely mention a lower amount in the deed while signing it. Yes, you can let you father will the property to you and after his death, you can inherit it. I don't think there would be any issues regarding that. However, you'll have to probate the will after your father's death.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
Though you transfer the property through a warranty deed, you'll still have to pay the gift taxes. You can definitely mention a lower amount in the deed while signing it. Yes, you can let you father will the property to you and after his death, you can inherit it. I don't think there would be any issues regarding that. However, you'll have to probate the will after your father's death.
Feel free to ask if you have further queries.
Sussane
I am not sure, but I am under the impression that each individual can inherit up to 3,500,000 without having to pay any inheritance taxes, and that if your inheritance exceeds that amount, that you then and only then pay an inheritance tax at 45%. If this is the case, the property that I will be inheriting (if I have my father Will it to me) is just under 1 million. If this is so, and my above statement is correct...then I should not have any inheritance taxes if I obtain the house via a Will from my Father, instead of him giving it to me via a Warranty Deed since that would entail him having to pay some Gift Taxes. I know the Will would mean having it go through probate and the Warranty Deed does not, but which one if more financially better? I am under the assumption that an individual also has what is called a Uniform Credit amount and an Estate Exclusion amount. Could you enlighten me as to what exactly these are AND how they apply to my situation. thanks, John
Hi JRS,
The applicable credit amount was earlier known as uniform credit amount and sometimes referred is also referred to as the exclusion amount. In the year 2000, it was $625,000. This means that an owner can pass $625,000 of property to his/her heirs, free of federal tax. This property can be passed either through gifts or by a will. You can contact an attorney and get further information in this regard. Then you may ask your father to either transfer the property through a will or gift the property to you through a warranty deed.
Thanks
The applicable credit amount was earlier known as uniform credit amount and sometimes referred is also referred to as the exclusion amount. In the year 2000, it was $625,000. This means that an owner can pass $625,000 of property to his/her heirs, free of federal tax. This property can be passed either through gifts or by a will. You can contact an attorney and get further information in this regard. Then you may ask your father to either transfer the property through a will or gift the property to you through a warranty deed.
Thanks
The year 2000 and its applicable $625,000 credit amount...I understand now and thanks. What I would now like to know now is that amount from the year 2000 still the federal credit amount used in 2009? Is it still only 625,000 or has it been increased over the past few years--How much is it today? I am sure hoping that the amount has been increased! Much thanks, John
Hi JRS!
Welcome to forums!
I don't think this credit limit has increased. It would be better if you could contact a tax assessor and check out if there has been an increment in this credit dollar amount or not.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
I don't think this credit limit has increased. It would be better if you could contact a tax assessor and check out if there has been an increment in this credit dollar amount or not.
Feel free to ask if you have further queries.
Sussane
My folks have some property which they would like to transfer over to us, but we had heard that only a certain amount can be given in on year from each parent. So that amount can be given to both my husband & myself form each. Can you tell me what that amount is?
Hi cheryl,
Your parents can transfer the whole property to you but they may have to incur gift taxes for that. However, a married couple can have gift exemptions to make gifts worth $26,000 per couple per year without paying any gift tax. Apart from this, a lifetime gifting limit of $1,000,000 is allowed before a gift tax is incurred.
Thanks
Your parents can transfer the whole property to you but they may have to incur gift taxes for that. However, a married couple can have gift exemptions to make gifts worth $26,000 per couple per year without paying any gift tax. Apart from this, a lifetime gifting limit of $1,000,000 is allowed before a gift tax is incurred.
Thanks