Have a Tax Question? Ask a Tax Expert
Hello JA Customer,
Where the taxpayer's property is transferred such that someone else holds title to the property, but the taxpayer continues to enjoy the full use and benefit of the property, the person holding title may be deemed to hold the title as a nominee for the taxpayer, i.e., in name only. In such an instance, the IRS may file a nominee lien with respect to the property. The lien filed in the name of the nominee is filed only with respect to the taxpayer's property held in the name of the nominee.
The government bears the burden of proving the nominee status by a preponderance of the evidence. Factors considered in making this determination include the following:
Since you would basically be signing over this property to a close relative for no monetary consideration and in anticipation of a possible lien, this property would still be subject to lien by the IRS.
Hello again joyce,
Even though you may have recorded the quit claim deed with the county, that is only one of several factors that the IRS looks at in determining whether or not the property is simply being held by a nominee. Most, if not all of the other factors on that list still appear to apply in your situation.
I am not quite clear as to what transpired with the $98,000 that you say your son paid on your mortgage. If your son was not legally liable for this debt and simply paid that amount on your behalf, he should have filed a gift tax return back in 2003 to report this as a gift that he gave to you. No gift taxes would have been due since the amount is still well below the $1 million lifetime exemption he is allowed on gifts, but he would have been required to report the gift by filing Form 709.
If you can show that your son did contribute this amount of money to payments on the home, then you might possibly have a case for the IRS not to include the entire amount of the property in the tax lien. But there are enough other factors here that they could still certainly file a tax lien for the value of the home that exceeded that amount.
Unfortunately that is not a tax question and is something that would need to be answered by a real estate attorney.