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Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 33803
Experience:  15 years real estate, Realtor. Landlord 26 years
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My parents want to sign a quit claim deed house they bought

Customer Question

My parents want to sign a quit claim deed for the house they bought 7 years ago specifically to rent to me. If they do this, and I get a loan to pay off their remaining balance, what aRe the tax implications for us. The house is valued around 215,000, but the balance is be paying off is about 130,000.
It is not their residence, they've never lived in it and I've paid for everything as though I'm the owner for 7 years (HOA dues, repairs, upgrades....)
Submitted: 5 months ago.
Category: Real Estate Law
Expert:  Barrister replied 5 months ago.

Hello and welcome! My name is ***** ***** I am a licensed attorney who will try my very best to help with your situation or get you to someone who can. There may be a slight delay in my responses as I research statutes or ordinances and type out an answer or reply, but rest assured, I am working on your question.


They would be deemed to have made a gift to you for the value of the property minus the debt you are paying off. There would be potential gift taxes due from them over the annual exemption amount of $14K each. So parents could automatically exempt $28K of the gift and then could use up a small portion of their "lifetime gift tax exemption" of $5.45 million by filing an IRS Form 709 with their taxes in the year of the gift to avoid any taxes at all.


So basically they are giving you $85K in equity, $28K of which is exempt. So they can file the 709 Form to exempt the rest and avoid paying any gift taxes on the transfer at all.





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