Y’all aren’t my lawyers nor accountants and etc. I’m just trying to get an idea of what’s possible for a couple of different situations in my life.
If I have a house and want to add someone to the title as joint tenant with right of survivorship, can I just have the title changed or does it require some sort of closing like a purchase? Would this be affected if there’s a mortgage on the property in my name?
If the house in question has appreciated tremendously since the original purchase (say in the 300,000 - 500,000 range; the neighborhood has “gentrified”), would this cause a capital gains tax issue at this time, or would capital gains still only come into effect when the house is sold?
The answer to your one question will vary from state to state, and from lender to lender. I speak with some knowledge simply because a good friend of mine just went through a divorce, during which all sorts of options regarding mortgages involved in two properties had to be dealt with. There was no consistent treatment of the issue by the banks consulted.
As for capital gains, I would think it wouldn’t matter too much, as there is, IIRC, a rollover exemption up to a certain value for houses which are sold when a new one is purchased to replace it. So even if you were forced into a “sale” to add the name to the title, I would think that wouldn’t have any consequences. Having said that, I am not an accountant, so in addition to the fact that you are not my client, I am not your attorney, we don’t have a relationship, etc., I may just be blowing smoke out my nether region.
To clarify: I’ve got two situations. One is a house with a mortgage, one is a house without.
The more urgent situation is the house with no mortgage, but which has the huge increase in value. So lender issues aren’t a problem there, just the capital gains thing.
I am pretty sure that DSYoungEsq’s rollover exemption info is outdated. A number of years back it was changed to a $250K gains exemption for singles ($500K for married couples) if you lived in the house for 2 of the past 5 years.
That is probably a moot point though because you wouldn’t have to sell the house to add someone to the deed. You would however be essentially giving them half the value of the house and there would likely be some major gift tax issues.
For the mortgaged property I am not sure. The real estate lawyer that you will undoubtedly need anyway will know.
In practice, there is no such thing as a “Gift Tax”. What you have to do is file a Gift Tax Return, which affects the Estate tax, when and if there is one.
I suppose if you gave someone $1Million all at once, it might kick in (I think that’s the current Estate Tax floor?). :dubious:
What would happen is that if the OP deeded half his house to someone he was going to leave the other half to, then the IRS would likely consider the entire house as part of the Estate. YMMV, please consult your own Tax specialist.
