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Buying or Selling a Home/Changing the name on a title deed

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Expert: John Hendricks - 2/25/2009


Question
Hello,

My wife has a house in Southern California that she’s been renting out for the past 10 years.  Her mother and deceased father names are on the title deed to the house.  Her mother wants to remove their names and put my wife’s name only on the deed.  1) What kind of fees are associated in doing so? 2) Are their any tax implications? 3) Can the mother give the house to my wife as a gift?

The home was purchased for $190k and is probably worth $400K right now.

Thanks,
Jeff

Answer
Dear Jeff;

Thank you for your question…

In regards to gifting you the house, there could very well possibly a State and Federal tax on that type of situation. On the other hand, if your wives mother would be allowed to be quit claimed onto the property as a part owner, and if they held the property in joint tenancy, there would be a right of survivorship that would exempt your wife from taxes when her mom dies. There are a few questions, a CPA would be able to answer in this situation with her dad who is deceased and how the property was held before and currently. As an example, joint tenancy, joint community property, community property or a few others would be how title was held which would help the consultant provide you with the correct details of how to handle the situation. This is beyond my expertise as a Realtor and is more suited for either a real estate attorney or CPA. By the way, Quit Claim Deeds are minimal costs for preparation, notarizing, and recording.

To answer your follow-up question… This is another question for the CPA… As I understand it, even though your wife lived in the house for 2 years, she had no ownership; therefore the 2 year rule would not apply. When she takes ownership or part ownership at some time in the future, it would be considered an income property at that time and would be addressed when selling the property. She would probably want to enter a 1031 exchange to defer any taxes she may owe due to the sale. If both her mother and her were to take the property as Joint Tenancy, right of survivorship may play into to this to reduce her capital gains if she was quit claimed onto the property as I described earlier. The portion of the cost basis when her mother dies would be brought to current value of the property the day she died, therefore reducing the profits of the house. If your wife decided to sell the home and cash out, she would be responsible for her portion of the profits alone for capital gains. Once again, a CPA would better to advise you based on the current IRS and State tax laws that would apply. Please review my comments with a CPA to confirm my recommendations as I am a Realtor not a tax advisor.

I am sorry for the delay in answering your question. I was on a business trip and returned yesterday. Thank you once again for your question and patience. I hope this helped to answer a few of your concerns.

Warmest Regards;
John Hendricks

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John Hendricks

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As a California Realtor for 23 years practicing in Marin and Sonoma Counties, it is now time to provide counsel through AllExperts.com to those who need advise in real estate. My knowledge and experience includes a wide range of resale residential real estate purchases, new home sales, income related investment properties involved in 1031 exchanges, and land. Let me help you in any of these areas...

Experience

John Hendricks has established himself as one of Marin & Sonoma Counties premier Realtors. A native Californian, John is a well-known and respected Realtor in both Marin & Sonoma Counties who has resided in the Northbay since 1976. John began his real estate career in 1986, and since then has distinguished himself as one or Northern California's top producing Realtors. Before joining Frank Howard Allen Realtors, John was an associate of the Prudential California Realty from 1990-1992 where his outstanding sales achievements earned him one of the company's highest honors, the prestigious "President's Circle Membership", presented to the top 2% of associates for sales and earning excellence. Since his association with the highly regarded Frank Howard Allen Realtors in 1992, John has once again established himself as one of his company's Top 10 Producing Realtors in Marin & Sonoma Counties for the years 1993 through 2007 and now in 2008. Five continuous years of outstanding performance has now allowed John to join 15 other Realtors in the prestigious "Lifetime Hall of Fame" for Frank Howard Allen Realtors. John established a group of professional individuals who specialize in a variety of areas in real estate called, 'Lundmark-Hendricks Fine Homes' This group of professionals are dedicated to the success of representing clients with the greatest amount of care and service when either buying or selling real estate.

Organizations
California Association of Realtors National Association of Realtors

Education/Credentials
Upon Request...

Awards and Honors
Frank Howard Allen Realtors "Hall of Fame Member" Chairman's Circle for 10 consecutive years

Past/Present Clients
Joe Louis & Sharon Sigurdson We want to thank you again for your excellent representation of interests during the recent purchase of our home in Petaluma as well as the sell of our home in Mill Valley. We had the unusual pleasure of working with you during the last year both as sellers and buyers. We felt that our interests were always paramount and that we received a very fair price for the sale of the Mill Valley house as well as our purchase of our new home. This speaks particularly well of you, because of the recent unstable and chaotic real estate market. Will Finke "Quite frankly, we came out of a very difficult situation, which time does not allow elaborating on. This was one of the greatest experiences of our lives as clients. John Hendricks is one of the top businessmen I have ever met." Bruce & Nancy Rosentreter "I chose John Hendricks to sell my house. I picked him because I thought he was professional, aggressive, and that he could get top dollar for my house. He fulfilled my expectations completely." Joy Schuelke "Since we were trying to sell a high end home in a very tough market, and in the middle of a very rainy winter, the prospects seemed quite bleak. I was convinced at the time, and am even more so now, that without John's tenure, patience, and tenacity, we would have not been able to move the property." Lynn McCarthy "I cannot stress strongly enough how impressed I was with the service provided to me by John and his group. Throughout the entire transaction, John was always available, always forthcoming with excellent advice based on his years of experience, and always willing to put in the extra effort to make this a positive experience for me. I feel lucky to have had the experience of working with him." Lea Lieurance-Turk "Thank you John for your outstanding real estate services for the past 5 years I have known you. You have made my dreams come true as far as selling and buying property."
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