Tax Implication of Quit Claim Deed

I've been reading through the posts and I should also ask this question - is gift tax an issue here when doing a quit claim deed incident to a divorce? We agreed that my wife would quit claim her interests in teh house to me. Her name is NO LONGER on the mortgage.

welcome beaker.

Gift tax is worth considering when a person quitclaims property to some other individual. In your situation, the tax should be paid by your wife as she will be quitclaiming her share of interest. But there are exemptions involved. If she'd like to take a look at the gift tax exemptions, you may refer to the page: http://www.mortgagefit.com/gift.html#exemption .

Thanks.

Thanks for the reply. Yeah, I understand that my ex-wife is on the line to file the gift tax form if it is an issue. Is the gift tax based on the estimated market value of her interests or is the gift tax based on the consideration clause in the quit claim deed, which indicates the sum of one dollar? Also, as I understand it, my ex-wife does not need to actually pay a gift tax until she exceeds $1 million in gifts, correct? By the way this is an amicable divorce and we are working together on this. I understand that gift tax may not be an issue in a divorce, but I'm going to get an attorney advice on that. Please let me know if I'm understanding the gift tax in the correctly.

Hi Beaker.

Welcome back. $1 million in gifts exemption limit is in her life time. But the yearly exemption limit is $12,000. BTW it is good that you are going to consult with the attorney. Feel free to ask if you have any further questions.

Best of luck,
Larry

Yes I understand the 12000 annual limit. That means after 12000, she may have to file a gift tax form with her taxes...but she should not have to pay any gift taxes until she exceeds $1 million. Do I understand this correctly?

Hi Beaker,

I think you've gotten it right. Beyond $12000, she'll have to file gift tax returns but only if she has exceeded the $1 million in total gifts till date in her lifetime.

Thanks

The title of the house in question has both parents and one child on it. The parents want to quit claim and add the younger child to the title. The amount should be around $ 350 K for each child. What are the tax implications on this scenario. Who pays the tax, if any.

Hi junior,

If the parents are gifting the property to their children, then they will be liable for paying gift taxes. If the children sell off the property, then they would be liable for paying the capital gains taxes if they incur any profit from the sale.

My parents did a quit claim deed on their house and added my two oldest sisters names to the deed because when they died the house won't have to go though court, they also gave the same sisters conservership over them and added their names to all their bank accts. Now both of my parents are dead and the two sisters say that everything belongs to them. Their is a will that states that all children get equal shares when they die. My two sisters states that they don't have to follow the will because everything is in their name

As the property and the bank accounts are in their names, your sisters would own it. Though the will states that the property will be equally divided, as your sisters have the property and the bank accounts in their names, they would get the priority.

My parents want me to have their property when they are gone. They want to keep the taxes the same, CA, home with Prop 13. By quikclaiming home to dtr will the taxes remain the same if Mortgage is not refinanced? and if refinanced is their a chance taxes will be reassessed?

Does a quikclaim have to be filed now or can you wait until they are gone? what are the pros and cons?

Hi Megan,

After there is a change in the property ownership, the taxes will be reassessed. Sometimes, the taxes may increase whereas at times they may remain the same. Thus, you should contact a tax adviser and take his opinion in this regard. You should file the quitclaim deed when your parents are alive. The quitclaim deed may not remain valid if you file it after they are gone.

Thanks