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Merlo
Merlo, Accountant
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I currently have a small balance on a mortguage in my name

Customer Question

I currently have a small balance on a mortguage in my name only on a property in Florida. I live in MA.I am single never married.
I want to add my sister to avoid probate if something should happen to me .How do I go about this?

Thank you Doris
Submitted: 3 years ago.
Category: Tax
Expert:  Merlo replied 3 years ago.

Hello Doris,

 

You could not actually add your sister's name to the mortgage as she would need to be approved by the lender, and this would involve applying for a new mortgage.

 

You may, however, just add her name to the deed as a joint owner by signing a quit claim deed. A quit claim deed form can be purchased at any major office supply store such as Office Depot. There are also some on line websites that have this form. You would simply need to fill out that form adding her name to the title, and then file the quit claim deed with the county where your home is located.

 

Keep in mind that in the eyes of the IRS, you would be giving your sister a gift equal to one half of the market value of the home, and because of that you would need to file a gift tax return, although it it highly unlikely you would actually owe gift taxes.

 

First, if and when gift tax is ever due, it is paid by the donor and not by the recipient of the gift. However, under current regulations, each taxpayer is allowed to give gifts in their lifetime of up to $1 million before any gift tax becomes due.

 

In addition to the $1 million lifetime exemption, each individual is allowed to give annual gifts of up to $13,000 to any number of individuals, and those gifts do not even apply towards the lifetime exemption, nor do they need to be reported. Gifts which exceed the annual exclusion of $13,000 must be reported by the donor by filing Form 709 with the IRS to report the value of the gift. However, no tax is actually due unless that donor has already reached his $1 million lifetime limit. The amount reported then reduces that donor's remaining lifetime balance that he may give in non-taxable gifts.

 

If this was helpful please press the Accept button. It is the only way we receive any credit for helping with these questions, even though you have purchased an unlimited subscription.

 

Thank you Doris

 

 

 



Edited by Merlo on 9/2/2010 at 1:27 PM EST
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and 3 other Tax Specialists are ready to help you
Customer: replied 3 years ago.

I will accept your answer it was very helpful.

 

Is there any form that needs to be filed with the Bank of America that currently holds the mortguage?

 

If I pay off the mortagage and the property is cleared how would the quick claim deed work then?

Expert:  Merlo replied 3 years ago.

Hello again JA Customer,

 

If you pay off the mortgage, then of course there is no need for you to inform the Bank of America that you are adding another name to the deed on your home. You would simply fill out the quit claim deed and file it with your county recorder of deeds.

 

If you do not pay off the mortgage before adding your sister's name, I cannot say for certain whether or not this would require permission from the BOA since they basically hold a lien on the property until your loan is paid in full. You would really need to check with the bank to see what they would require.

 

If this was helpful please press the Accept button. It is the only way we receive any credit for helping with these questions.

 

Thank you

 

 

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