Posted on: 23rd Jun, 2007 08:33 am
my father and brother own a property together which the mortgage and deed are in my fathers name only. can my father quit claim deed to my brother without tax consequences? will there be a problem with the mortgage if my brother keeps paying and his name is the same as my father?
Hi Terry,
Welcome to Mortgagefit discussion board.
Yes your father can quit claim the property to your brother. If the property is quit claimed for a value less than its current market value then it will be considered that property has been gifted to your brother. And there may be gift taxes due for your father to pay being the donor if the allowed gift tax exemption limits are crossed.
The annual exemption limit is $12,000 and if the value of the gift exceeds this amount then your father will have to check if the lifetime gift tax exemption limit of $1 million has been crossed or not. If it does then your father will have to pay gift taxes on the amount that crosses the exemption limit.
Coming to the other point about the mortgage, after the deed is made out there will be a change in the way title is held from what it was at the time mortgage was taken. The mortgage company can ask for the mortgage to be paid off or refinanced in your brother's name if they come to know about the title transfer.
Do let me know if you have any other questions.
Thanks
Blue
Welcome to Mortgagefit discussion board.
Yes your father can quit claim the property to your brother. If the property is quit claimed for a value less than its current market value then it will be considered that property has been gifted to your brother. And there may be gift taxes due for your father to pay being the donor if the allowed gift tax exemption limits are crossed.
The annual exemption limit is $12,000 and if the value of the gift exceeds this amount then your father will have to check if the lifetime gift tax exemption limit of $1 million has been crossed or not. If it does then your father will have to pay gift taxes on the amount that crosses the exemption limit.
Coming to the other point about the mortgage, after the deed is made out there will be a change in the way title is held from what it was at the time mortgage was taken. The mortgage company can ask for the mortgage to be paid off or refinanced in your brother's name if they come to know about the title transfer.
Do let me know if you have any other questions.
Thanks
Blue
Even if there names are same, your father's personal details as recorded with the lender are different. If they come to know that even after title transfer payments are been sent in your father's name they can ask for repayment of the full loan amount.
Miller
Miller
"Will there be a problem with the mortgage if my brother keeps paying and his name is the same as my father?"
That could be considered as one type of fraud Terry.
That could be considered as one type of fraud Terry.
Terry your brother can continue making the payments without informing the mortgage company about the change in ownership. But they would certainly ask for the loan to be paid off or refinanced after becoming aware that ownership has changed.