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Giving the Gift of Home?
I own a home and paid for it in cash. I have paid all the bills on time. No problems with the property. Based on these factors can I sign my house over to anyone? Can I sign a house over for less than I paid for it? After a house is purchased, how long is it before it can be signed over? Are there other issues that might arise from signing a house over?
As a sane and sober adult you can generally give your property to anyone. That said, let’s look at some issues.
First, if you give the home to someone there will be gift and estate taxes to consider.
Second, if you sell the home to someone for less than fair market value there may be tax claims based on the “imputed value” of the discount.
Third, changing title may set off transfer taxes. However, if you transfer an interest for “good” consideration, such as love and affection, then in some jurisdictions there may be no transfer taxes. Property taxes will continue to be based on local assessments.
Fourth, instead of an all-cash purchase, if you quickly resell a financed home the lender may feel you got low-risk, low-cost residential financing, but you’re really a stealth investor. Depending on the facts and circumstances, that might lead to claims of mortgage fraud.
Fifth, you want to use proper paperwork and recording to avoid future liability.
Sixth, the rules may change if you’re facing such situations as bankruptcy or divorce.
Seventh, capacity counts. Gifts from older people, for example, are sometimes challenged with claims of diminished mental capacity. You really do have to be sane and sober when giving away a home.
The bottom line: A home is a huge asset. If you want to give real estate to someone, do it right with help from a fee-only financial planner, tax professional and local attorney.
Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to firstname.lastname@example.org.View Foreclosure Article Archives
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