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Guest

Hi, my brother and I received this house thru quit claim deeds from our parents. He is the primary owner and I am secondary. He never paid for mortgage payment nor property taxes... I am the one that pay for this. It's been four years and now he wants out. I am willing to give him $200,000K to buy him out. What paperwork should I need to file ? I know the property tax would go up, would it make sense for him to do the quit claim deeds or sell his share to me. Thanks

miller_st · Joined: 17 Jan 2007 Posts: 918 168.95 Dollars($)

Hi,

How much is the value of the house? Have you calculated value of his share of ownership in the house?

After you get the house you will have to either refinance the mortgage in your name or pay it off. Have you calculated how much the new rate would be and whether you'd be able to afford the payments?

As it is inter family property transfer you can use a quit claim deed for the transfer.

Miller

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi Guest,

If your brother sells his share of property to you, in that case, he may have to pay the capital gains tax. The tax is to be paid on the profit earned on selling the property share to you, if he does not qualifies for the capital gains tax exemption of $ 250,000.

He can file a quitclaim deed to give away the property share to you entirely.

Guest

My brother can file a quitclaim deed to me but when I sell the house what would the cost (basis) be ? Is is zero since we got this thru a quit claim from our parents.... that means we would have to pay a lot of capital gain tax... let just say the house worth $800,000 now.

Also, does he have to pay gift tax when he deed the house to me without any interest consideration. I am trying to stay away from quit claim for these reasons, please give reasons for quit claim otherwise.

Let's say he sells his share of the house to me, can I still keep the old mortgage with his name still on there ? I have a good rate 5% now, if I have to refinance then the rate is higher. I am thinking of going this route, but the only thing is he has not live in this house the past five years, he was out of the country, that means he does not qualifies for the capital gains tax exemption of $250,000.

Thanks for the time to answer my questions.

Caron

Your concerns are quite obvious. Well, your cost basis at the time of sale will be the value of the property when your brother has quitclaimed the entire property to you. It will not be zero. So, your capital gains tax payments won't be that large enough as you are thinking it to be.

Now as far as gift tax is concerned, your brother may have to pay it but he can get an exemption in case the value of the property or gift transferred isn't beyond $12,000 (for individual tax filers). Know more on exemptions...

Coming to your third query, if he sells his share to you, he will no longer own it. So, the lender will not agree on the sale until and unless you take over the loan. That's because the entire property has been as the security and therefore the lender has an interest in it. And, if refinance requires you to accept a higher rate, do avoid it. It�s of no use changing your loan if you don't benefit out of it.

Since your brother hasn't been around for the past 5 years, therefore he won't qualify for the capital gains tax exemption.

Good luck

Guest

Hi all,
From your answers, I think quit claim is the best solution at this time since we will not have to refinance the house. My brother will have to pay gift tax since we are joint tenant on this property. One question is how do I calculate value of his share of ownership in the house ? he did not pay for mortgage nor property taxes.

Best Regards,

carnahandavid · Joined: 21 Dec 2006 Posts: 238 58.41 Dollars($)

Guest

Annual exemption limit is $12,000 and the lifetime gift tax exemption allowed is $1 million. It means that even if the annual exemption is crossed one does not have to pay gift tax if his life time exemption limit has not been crossed.

This is great news.... I did not know this... I thought that each year you allow $12K and whatever crosses that you have to pay gift tax.

Caron · Posted: Mon Aug 13, 2007 4:37 am Post subject:

Hi Guest,

It's good that you got the right information here. I guess it's going to help you. Isn't it?

Good luck anyway Smile

Guest

HOW LONG DO YOU HAVE TO REGISTER A QUITCLAIM DEED IN FLORIDA

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi James,

Welcome to the forum.

I think the duration to register a quitclaim deed is 30 days in Florida. Better if you go to the County register office in your state and clarify it.

Best of luck,
Larry

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.12 Dollars($)

Hi Guest,

You can take out a mortgage on the property to pay off your brother. The title comany that is involved in the refinance can have a quit claim for your brother to sign at closing and will also handle paying him the 200,000. The title company is an unbiased third party that will make sure both parties get what they need to out of the transaction.

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