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Tax implication when selling property after quit claim deed

Posted on: 04th Apr, 2006 12:58 am
I bought a property 1 year ago. I quit claimed the property after owning it about 2 months to my sister as a gift so she can have ownership on the house. The loan is under my name and she has been paying mortgage on it.

She is thinking of selling the place now. What is the tax implication of the sale? Since the deed is now under her name, would she be the one responsible for paying tax on the gain from the sale of the property or do i have to report the gain also on my income tax return at the end of the year? My name is no longer in the deed since I quit claimed it to her about 1 year ago.

Thanks,

Wonder
Hi,

Welcome to the Forums.

The first thing I would like to tell you is that you should have transferred the mortgage also to your sister when you quit claimed the property to her to avoid any hassles in future.

Since you say that your sister is the current owner of the property. So she should be the one paying the taxes on capital gains. But I would like to know that there are some others papers also that need to signed by you at the time of transfer of ownership rights.

I would also recommend you to take an advice from an attorney because he may be the best person you may want at this point of time.

I hope this information will help you.

Thanks,

Caron.
Posted on: 04th Apr, 2006 01:39 am
Hi Wonder,

I like your name "Wonder".

Now comming back to your question, yeah as she has been paying off the mortgage and as the property already quit claimed to her so all the gains and losses belongs to her only.

For your sister, on gifted property, if the value is over $11,000 which is per year per person gift limit then she has to file a form (706 or 709) with the taxes which states to consider the excess amount of the gift as part of $1 million lifetime gift exemption.

So, neither you have to pay anything nor you will get anything out from it.

Adonis
Posted on: 04th Apr, 2006 03:06 am
Thanks Adonis and Caron.

Question regarding what you said about the gift value. When you say: "if the value is over $11,000 which is per year per person gift limit then she has to file a form (706 or 709) with the taxes which states to consider the excess amount of the gift as part of $1 million lifetime gift exemption. ", do you mean the gain she sells the property or the value of the house when it's transferred over to her?

I bought the house for $250K 1 year ago. I transferred it to her 2 months after i bought it. And the market value for the house is around $300K now. Assuming she sells it for $300K, does she have to file the form 706 or 709 with the taxes?

Sorry for my naivity in this subject and appreciate any input that you guys have.

--Wonder
Posted on: 04th Apr, 2006 11:44 am
Hi Wonder,

Welcome to MortgageFit Forums.

First I would like to make it clear to you that individuals can exclude up to $250,000 in profit from the capital gain by selling the house provided they have lived in the home for minimum of two years.

To calculate the Capital Gain you must consider the value of the house when transferred to your sister. You need to subtract this value from the selling price of the house to get the gain.

Now subtract the maximum allowable exclusion from this gain to get the taxable gain amount.

This is a little confusing for general people. You must take help from your tax advisor to calculate and file the returns.

James
Posted on: 04th Apr, 2006 01:04 pm
Thanks everyone for the input.

I am glad there is a forum where everyone can help others in regards to RE transactions.

--Wonder
Posted on: 04th Apr, 2006 04:42 pm
my ex husband will not sign a quit claim deed and now unpaid federal tax liens are on my home, after 15 years of divorce, i have remarried. i need to have the liens removed, the mortgage company suggested a quit claim deed, the irs will take it but ex will not sign it what do i do
Posted on: 12th May, 2006 01:29 pm
Hi Veronica,

This is a problem often faced by divorced couples. That is why it is always recommended to settle these matters at the time of divorce itself.

I shall suggest you to consult your divorce attorney or any good attorney in your locality on the problem.
Posted on: 12th May, 2006 01:37 pm
Veronica,

Your rights are normally explained clearly in the Judgment and Decree. Some of the decisions can be changed after your divorce.

If one of you is awarded ownership of the home, the Judgment and Decree will state how this transfer is going to happen. Generally it orders for a quit claim deed.

If the quit claim deed is not signed then, you can check with an attorney and can refer County Recorder or Registrar of Titles to find out what can be done under that circumstance.

As 15 yrs. have passed already since your divorce and you are not aware of the legal bindings, it's better to consult an attorney and seek his help.

James
Posted on: 12th May, 2006 01:54 pm
My father quit claimed his house to three daughters 4 years ago. If he has to go to a nursing home and runs out of cash can the nursing home go after the house.
Posted on: 21st May, 2006 05:35 am
Can you be more clear about your situation.

If you are asking about utilising the home for paying debts then I think no.
Posted on: 21st May, 2006 07:45 am
My elderly mother wants to put her home in my name. Is it better to transfer the deed or should she sell it to me for a small amount?
Posted on: 06th Jun, 2006 10:07 am
Hi Wanda,

It can be done easily through a quit claim deed and I think that it's better to show the transfer as a gift from your mother to you rather than a transfer in exchange of money.

You must consult an attorney to get an appropriate suggestion on the way to transfer the house. Also you should prepare the deed under his guidance.

Blue
Posted on: 06th Jun, 2006 10:24 am
my mother signed a quit claimed deedpm her house to us in 1999 she recently was put in nursing home. State has now sent us a letter saying they are putting a lein on the house. What does this mean amd can they sell this home even after the quit claim deed was done
Posted on: 15th Oct, 2006 05:56 pm
Hi Allison,

I think you should enquire with the state officials as to what kind of lien they are putting on the house. A lien is a legal claim against an asset or property if the owner of that asset or property hasn't paid off any debt or financial obligation.

If there is any financial obligation if you have not fulfilled, the persons involved can put a lien on the property and sell it even if it is quit claimed to you. In fact, I feel it would have been better if you could have paid off any debt/obligation against the house after it has been quit claimed to you.

Thanks,

Caron.
Posted on: 15th Oct, 2006 08:46 pm
My daughter is going to quit claim a house to me. Will I be responsible for the property taxes. Seniors get a discount for taxes. Will I be able to claim the discount with a quit claim deed? In Georgia.
Posted on: 03rd Nov, 2007 07:47 am
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