How Does a Parent Sign Their House Over to Their Adult Child?

by Mallory Malesky

It's natural for parents to want to continue providing for their children into adulthood. Depending on your circumstance, you might decide to give your house to your adult child. While the process to sign over the house is fairly easy, there might be mortgage and tax implications you'll need to address.

Deeds

The quitclaim deed often is used when a property is given as a gift. This type of deed conveys any interest the owner, or grantor, has in the property to the grantee. However, a quitclaim deed doesn't offer any type of warranty concerning ownership or protection against future title issues. The deed must include the parent's name as the grantor and the child's name as the grantee. Additionally, the quitclaim deed needs to have a property description attached.

Recording

After the deed is signed, it needs to be recorded into the county land records system. Recording a deed makes the transfer public record and updates the property's chain of title. The next time a title search is completed on the property, the child will be listed as the current owner. Even though recording the quitclaim deed isn't required by law, it's recommended to do so. If the deed is not recorded, there is no proof that the transaction took place. This can cause future issues with the chain of title if the child tries to sell the property later on.

Mortgage Implications

If there is still an open mortgage loan out on the house, there are some additional factors to consider. Giving the house to your child does not remove your liability to repay the mortgage loan, nor does it make your child responsible for making the payments. The ownership of the property is the only thing changing. The terms and conditions of the mortgage loan remain the same. Your mortgage might include a due-on-sale clause. This means if the property is sold or transferred the lender can demand the balance to be paid in full immediately. The outcome of this situation depends primarily on the lender. You should consult with an attorney to review your mortgage documents before transferring the property to your child.

Tax Implications

Many states impose a tax on real estate transfers. Typically the tax is a small portion of the sales price listed on the deed. For transfers between parents and children, there are often exemption rules allowed by the state. Additionally, since you are giving the property as a gift, there won't be a sales price to base the tax from. Another tax you'll need to consider is the federal gift tax. This tax is imposed on the gift-giver for gifts of significant value, such as homes, vehicles or cash. Individuals can give up to $14,000 worth of exempt gifts each year, while married couples can gift up to $28,000. In regards to giving away your house, the value is determined by the fair market value of the property.

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