- 1 transfer deed of house to children
- 1.1 Can I Transfer a Deed to My House to My Kids Before I Die?
- 1.2 What is the Property Transfer Deed?
- 1.3 6. Transferees address for service
- 1.4 7.The Transferor Transfers the Property
- 1.5 No Property Transfer Deed on Completion
- 1.6 I want to transfer my house title to my child, what are the costs and tax consequences of doing so?
- 1.7 How to transfer house deed from father to child?
- 1.8 What Does It Mean to Transfer the Deed of a House to a Relative?
transfer deed of house to children
Can I Transfer a Deed to My House to My Kids Before I Die?
Deeds can transfer partial or full ownership of your house to your kids.
You can arrange to legally transfer the deed to your house to your children before you die. To do so, you sign a deed transfer and record it with the county recorder's office. There are a few types of deeds that accomplish this in California, including a quitclaim deed, grant deed and transfer on death deed.
The most common method parents use to transfer title to their children is the quitclaim deed. For example, Mom quits ownership interest in the property to give it to her child. There is no warranty of a clean title on this deed. A grant deed, on the other hand, does offer a warranty that the title is free and clear of any encumbrances. A transfer on death deed is signed in Mom's lifetime but doesn't go into effect until after she passes away.
Don't confuse the deed title with these other types of deeds to transfer ownership. The deed title is the official ownership record maintained at the county recorder's office. Quitclaim, grant and TOD deeds are actually deed notices, meaning they instruct the county that an ownership change is occurring. Once a deed notice is recorded at the county recorder's office, the title deed is updated, and a copy is available to the new owners.
All deed records must be notarized and filed with a Preliminary Change of Ownership Report form and a Tax Affidavit form, if applicable, or the corresponding exemption paperwork that usually applies between family gifts.
Both quitclaim and grant deeds become effective immediately upon recording at the county recorder. This poses a couple of potential risks. The house now belongs to the child. While most parents trust their children, there are instances of children selling the house out from under Mom and Dad for their own financial benefit. There is nothing parents can do in this instance; both deeds are irrevocable.
Additionally, there are potential gift tax issues by giving the property to a child. While the Internal Revenue Service allows $14,000 per year in gift tax exclusions, with a lifetime limit of $5.25 million, this is a consideration to review with a tax adviser prior to executing.
The TOD deed solves these issues by recording Mom's transfer wish with the recorder while she is alive, but it doesn't execute the official ownership transfer until Mom passes away.
Gifting the property deed does nothing to transfer the debt of the mortgage. Parents must either keep paying the mortgage, have the children refinance the loan in their names or request a loan assumption from the lender. Lenders are often reluctant to let others assume a mortgage and might execute the "due on sale" clause that exists in most loans.
With more than 15 years of professional writing experience, Kimberlee finds it fun to take technical mumbo-jumbo and make it fun! Her first career was in financial services and insurance.
This chapter explains how to draft the property transfer deed, which is the document which is submitted to HM Land Registry to transfer ownership of the legal title to land. If you are looking to carry out a property transfer yourself then you should note that there is more involved than merely drafting the property transfer deed. We recommend that you visit the following page: Guide to transfer of Equity or alternatively download our transfer of equity kit - it is a step by step guide to help you through the process.
What is the Property Transfer Deed?
In conveyancing the property transfer deed is the document which transfers ownership of the property from the seller to the buyer. It must be signed by all sellers. The property transfer deed will usually also be signed by the buyers, although this is not strictly necessary unless the property transfer includes covenants by the buyer or unless there is more than one buyer. A buyer's ownership can only be registered if he is in possession of a property transfer deed signed by the sellers therefore it is vital that the sellers' solicitor has the signed property transfer deed in his possession on completion so that he can give an undertaking to forward it to the buyer's solicitor. Without this undertaking, usually given in the replies to requisitions on title, the buyer is not obliged to complete, and should not do so.
According to protocol, and indeed the standard conditions of sale, the property transfer deed is drafted by the buyer's solicitor, although sometimes it will be done by the seller when issuing the contract papers. The property transfer deed is traditionally prepared after exchange although with solicitors increasingly being at a distance from each other and their clients, and with clients' demands leading to shorter gaps between exchange and completion, this approach is often impractical and it is more common now for it to be prepared at a much earlier stage. The property transfer deed must be in one of four standard forms, either the TR1, TR2, TR3 or TP1, depending on the nature of the transaction. The TR1 is used in the majority transactions, since this is for a transfer of the whole of a title by the registered proprietors of the title, and this is the version we will concentrate on here. To view an example TR1 (which is in Microsoft Word format and so can be downloaded and edited) click the link
Fairly self-explanatory, this where the title number(s) of the property transferred (there may be more than one) is inserted. For unregistered land it is left blank.
This is the address of the property which is subject to the property transfer. For registered land this must match the address on the Official Copies(unless some evidence is supplied on registration showing that the address has changed). For unregistered land you should show the full address and also refer to the document you are using as the Root of Title, for example it might read "1 The High Street, New Town NT1 2AB as more particularly described in the Conveyance dated 15th August 1977 between John Smith and Jack Jones".
This is the date that will be recorded as the date of completion of the property transfer. It should not be completed until completion has taken place, even if contracts have already been exchanged, because of the possibility of delayed completion.
The Transferor is the seller(s) (or in the case of a gift or transfer of equity the person making the property transfer) and their full name(s) is/are inserted here. The name(s) should match the Official Copies unless evidence of a change of name (for example a marriage certificate) is supplied, or in certain other circumstances, as follows:-
- Sale by Attorney - if the seller has given someone Power of Attorney to act on his behalf in the property transfer then the attorney can be named here. The wording to use is as follows:- "[Proprietor] acting by his attorney [attorney]". The attorney does not have to be named here, but if he is not, then the above wording must be added to the attestation clause, in place of the word "Transferor(s)". In either case a copy of the Power of Attorney must be attached to the Property Transfer Deed.
- Sale by executor - if the registered proprietor is deceased and the property transfer is by the executor/s of his estate then the following wording should be used:- "[Executor/s] as executors of the estate of the late [proprietor] deceased". There are other acceptable variations. A certified copy of the Grant of Probate, as well as certified copies of the death certificate/s of any joint tenants who pre-deceased the person for whose estate the probate is granted, must be attached to the Property Transfer Deed.
- Trustee appointed to join in the sale - if there is a restriction in the proprietorship register of the Official Copies stating that the property cannot be sold by a sole proprietor, and if all but one proprietor is deceased, or if there only ever was one proprietor, then it will be necessary for the selling proprietor to appoint another person to act as a "trustee" so that the restriction can be overreached (overcome). In this case the selling proprietor and the trustee must both be named here.
- Sale by mortgagee in possession - if the sale is by the holder of a charge over the property who has repossessed, then the seller would be the charge holder, however in this case the form used would be the TR2, rather than the TR1.
This section of the property transfer deed is where the buyer(s) name(s) is/are inserted. If buyer has given someone Power of Attorney to act on his behalf in the purchase then the wording used should be "[Buyer] acting by his attorney [Attorney]" and a certified copy of the Power should be attached to the Property Transfer Deed.
6. Transferees address for service
"Address for service" means the address where the land registry will serve any notices. For example if someone is attempting to claim possessory title of some land which is registered, this is where the land registry will right to invite the registered proprietor to make an objection. It is possible to have three addresses in this section. The first should be the buyer's home address following completion (usually the property address) and one of the other two ought to be an e-mail address. The option to use a second and third address is rarely used, though it should be.
7.The Transferor Transfers the Property
This is simply a statement of the transaction that is taking place (a property transfer). It does not require amendment.
The consideration is the sum being paid for the property transfer. There are three options, and the appropriate box should be checked. The first is used where a sum of money has been paid and this is therefore the most common. The sum should be written in words and figures. The amount in this box must be the actual purchase price, before any incentives or allowances are deducted, but not including and amount paid for chattels. The second option is to be used if something other than money is paid for the property transfer. This could perhaps be another property. The third option is used when the property is transferred as a gift.
The contract will state what level of title guarantee is offered by the seller, and that is recorded in this section of the property transfer deed.
This section of the transfer deed only applies where there are two or more buyers. If a property is held as joint tenants then all owners own the property absolutely, so that if one owner dies, ownership of that person's interest passes automatically to the survivors with no need for a property transfer deed. This is the most common option used for couples in relation to their home. Tenants in Common own the property in shares, and should a joint tenant die ownership of their share passes via their will or intestacy. This is more common for business partners. If the shares are intended to be unequal then the third box should be checked and the shares should either be set out here or, if the trust is more complicated, the details may be contained in a separate declaration, which should then be referred to here. If this section is not completed then by default the land registry will assume that the property is to be held as tenants in common. This can cause serious problems if the intention for it to be held as joint tenants. Consider this example. A couple meet, decide to buy a home together but never marry. They intend to hold the property as joint tenants but the solicitor fails to note this in the property transfer. One of the couple has children from another relationship, and he or she passes away intestate (without leaving a will). As the couple were not married, the rules of intestacy say that the deceased's share will pass to the oldest child, rather than to his or her partner. If the children do not approve of the deceased's partner then they would be entitled to force the sale of the property and leave the survivor of the relationship with only half the equity. Clearly the client would be looking to the erring solicitor for compensation. It could of course be equally disastrous if a joint tenancy were created where the intention was for tenants in common.
This is where any new rights, covenants, restrictions, declarations etc are inserted into the property transfer. In this example you will we have an indemnity covenant. This is merely a covenant to observe existing covenants. It is unusual in a TR1 to impose fresh covenants or create new rights, since the title has already been created and is merely being transferred. It is fairly common to see various clauses which amend the implied covenants set out in the Law of Property (Miscellaneous Provisions) Act 1994. See the section on Useful Transfer Clauses for examples.
This is where the sellers and buyers sign the property transfer deed. As this is a deed, the signatures must be witnessed. The witnesses must be independent adults, that is to say over eighteen, not family members of the parties to the transaction and not parties to the transaction themselves.
No Property Transfer Deed on Completion
When acting for a seller it is inevitable that at some point the day of completion will arrive and you will not be holding a property transfer deed signed by the seller. Every effort should be made to ensure this does not occur but where it does, it is permissible, with the consent of the buyer's solicitors and the seller, to complete but to retain the balance of the sale proceeds that are due to the seller until a signed property transfer is provided. This option would of course not be available if the sale proceeds were needed to fund a linked purchase.
I want to transfer my house title to my child, what are the costs and tax consequences of doing so?
The costs associated with a deed transfer will vary by state and by how the transfer is accomplished. Filing a deed yourself may be the cheapest method, but it will require quite a bit of homework to ensure you have filled out and correctly filed the appropriate paperwork. Online legal document centers, such as LegalZoom, offer deed transfer services for around $250, plus filing fees. These services typically include title research, creation of the real estate deed and filing of the deed with the county recorder's office. You can also hire a real estate attorney to execute the deed transfer. This might be the most expensive option, but it may also be the least stressful since you would be certain the transfer was executed appropriately.
Tax consequences can end up costing your child more money than if he or she were to inherit the property. Assume you purchased your home years ago for $50,000. Over the years you put $20,000 into the home. It has a current market value of $250,000. Because you transferred the home to your child while you were still living, your cost basis, which would be $70,000, becomes your child's basis. If your child sells the home, he or she would owe capital gains taxes on the difference between the sale price and the cost basis, which would be $180,000. At a capital gains rate of 15%, that would equal $27,000 in taxes. The tax rate will be higher if you owned the home for less than one year, at which point the profit would be taxed as ordinary income.
If your child moves in and lives in the property for at least two out of five years before selling it, up to $250,000 of profit can be excluded. However, $500,000 can be excluded if filing jointly with a spouse. Your child will have to use your cost basis of $70,000, which includes the $50,000 purchase price plus the $20,000 in improvement costs.
If your child inherits the property upon your death, the child will receive the "stepped-up basis" where the value of the property on the date of your death becomes the child's basis. So, if the property has a market value of $250,000 at the time of your death, your child could sell the home for $250,000 and not be responsible for capital gains tax.
It has been suggested that the stepped-up basis rule could be modified in the future. Since tax rules do change, it is important to consult with a qualified tax specialist before making any decisions.
Depending on the market value of the house, transferring the house to your children could be a “gift9rdquo; from you to them in the eyes of uncle Sam. What does that mean to you? Possible gift tax. For 2018, an amount of gift above $15k will need to file a tax return. Considering a much higher amount of lifetime gift exemption of $11,200,000 (single) or $22,400,000 (couple), you may not pay any tax in reality, but please consult with your CPA or estate planning attorney for your particular situation.
Besides the tax concern, a more practical matter is if you have everything else taken care of, such as your living expenses, medical cost, future long-term care cost, etc. before you give the house away. Realistically speaking, most people use their home as a form of investment, hoping to access this pot of savings someday to supplement their retirement expenditures or other financial goals.
A better way for you to do right now is to consult with a CFP® who will guide you properly once knowing your finance in a deep level. Best!
How to transfer house deed from father to child?
1. If your father has lived in the home for two of the past five years, the sale is exempt from capital gains tax.
2. Your father will be required to file a gift tax form, but there is no gift tax due until your father gives you a total of $5,000,000.
3. Transfers from parent to child carry over the Proposition 13 property tax limits, so you will not need to pay more in property taxes.
4. I think the transaction is also exempt from the Documentary Transfer Tax, since it is a gift.
What Does It Mean to Transfer the Deed of a House to a Relative?
by Duncan Jenkins
To change property ownership, you need to file a quitclaim deed.
Ownership of property is often a joint affair. For married couples, there is usually a deed of trust showing both parties as owners on the property. In other cases, an entire family may own a house or a piece of land together. Ownership of property can be changed and modified using a document called a quitclaim deed. This process is relatively simple, but the consequences of ownership change are significant.
Transferring ownership can mean a couple of different things. It is possible to transfer ownership to a relative and at the same time maintain your own ownership; in this case, you and your relative would be co-owners of the house. However, you can also transfer ownership entirely to your relative, removing your name and giving your relative full ownership rights. The critical difference is in the way you fill out the quitclaim deed.
A quitclaim deed is not a contract in the general sense. Rather, the deed is the actual transfer of ownership on the property. This is called conveyance. If you are the current owner and your relative is the prospective owner, his name would be listed under "grantee" and you, as the owner, would be listed under "grantor." It is important to have a notary public witness the signing and notarize the quitclaim deed.
The warranty deed is the assurance given by the "grantor," or the current owner, that the property is free of liens and attachments. It is to assure the "grantee," usually when the house is being sold, that the house is free and clear of all debts and liens. This is different from the quitclaim deed because the warranty deed does not represent conveyance; no ownership transfer takes place when this deed is completed.
Once a quitclaim deed is recorded at the local registry of deeds, the transfer of ownership is complete and permanent. However, ownership of the property can always be modified. In order to do so, however, it requires the consent of all parties now listed as owners on the property. Therefore, if your relative was added to your house as an owner, you must obtain his consent before adding another party to the house in the future.
Based in Eugene, Ore., Duncan Jenkins has been writing finance-related articles since 2008. His specialties include personal finance advice, mortgage/equity loans and credit management. Jenkins obtained his bachelor's degree in English from Clark University.