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jennandchad · Joined: 04 Jun 2011 Posts: 1 1.34 Dollars($)

My Dad, who is near death, wants to transfer the deed to his house to my sister in order to avoid probate. Will my sister have to pay a gift tax? Will she be responsible for the outstanding loan balance? He took out a reverse mortgage and owes about $245,000. The house is not in good condition and is not in a good neighborhood. It is only worth about $250-$275. What are the implications of this type of deed transfer?

gmakerley · Posted: Sun Jun 05, 2011 6:55 pm Post subject:

Like all other types of mortgage, a reverse mortgage is payable in full at the time that the property is transferred. That is the biggest implication of this sort of transaction.

smithsussane · Posted: Sun Jun 05, 2011 8:11 pm Post subject:

Hi jennandchad!

Welcome to forums!

If your father is transferring the property as a gift to your sister, then he will be liable for paying gift taxes. Your sister won't be liable for paying any gift taxes. After the transfer of the property, your father will be liable to pay off the reverse mortgage in full or else the reverse mortgage lender will foreclose the property.

Feel free to ask if you've further queries.

Sussane

gmakerley · Posted: Mon Jun 06, 2011 10:18 am Post subject:

I doubt that a foreclosure is in the cards...if the lender should accidently learn of the transfer of title, they'll call the loan. That simply puts your Dad in the position of being required to pay it in full. Only when a person defaults on an obligation does foreclosure rear its ugly head.

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