Transfer on death deed vs. quitclaim deed: what’s the difference? A transfer on death deed is not the same as a quit claim deed.
Q: I have read many articles from you concerning quitclaim deeds. I have a very specific question related to it.
Does the IRS say the grantor is giving a gift to the grantees when someone records a new quitclaim deed that includes the children? My accountant and lawyer state that the IRS doesn’t say this is a gift.
My mom is older and owns her home worth about $150,000. She is quitclaiming her home to me and my sister. As it was explained to me, this only includes an interest in the house. It still belongs to my mom and if she sold it, she would get the proceeds. If she died, then the children would get the house without going through probate and the adjusted cost basis for the house would be at the time of the death.
Transfer on Death Deed vs. Quitclaim Deed | What’s the Difference?
A: We think the problem is not whether we’re right about quitclaim deeds, but whether you’ve confused a quitclaim deed with a transfer on death deed.
In a quitclaim deed, your mother conveys to you and your sister her interest in the property. After the quitclaim deed is filed, your mother would no longer own any part of the home. That’s because she conveyed title to you. That quitclaim deed would essentially transfer all of your mother’s interest and ownership in the home to you and your sister.
A transfer on death deed (which is known by different names around the country) is an instrument that does not transfer any interest today in a home to those individuals designated in the deed. In fact, the owner of the property continues to own the home and can even revoke the transfer on death deed or can decide to sell the home to a different person while they are still living.
The purpose of a transfer on death deed is to give the owner the option to designate who will own the property if the current owner dies. The owner could name the heir of the property in a will, but the intended beneficiary would have to wait for the court in probate to issue a deed to transfer title from the deceased owner to the intended beneficiary.
In an attempt to avoid probate court, the transfer on death instrument would take effect on the death of the owner of the home. Transfer on death instruments are relatively new and some states and title insurance companies are trying to work through some problems they see with these sorts of documents.
Tax Implications of Transfer on Death Deeds and Quitclaim Deeds
In terms of your question, the quitclaim deed that transfers ownership would transfer that ownership at the time the deed is given to the new owner and recorded. For federal income tax purposes, the transfer date would trigger any tax issues.
On the other hand, the transfer on death instrument causes what is known as a “taxable event” at the time the person dies. In your example, the value of the home at the time the transfer on death instrument is recorded might not be relevant. It only matters what the home value is when the person dies.
The heir that takes title on a transfer on death deed will likely take that title to the property at the value the property had at the time of that death. If the property has gone up in value, the new owner’s basis (cost) would be the value at or around the time of the death. That’s helpful if the new owner wants to immediately sell the property at the new higher value because taxes would be minimized.
In a quitclaim deed situation, the new owner takes title with the cost basis that the owner had on that property. If the owner’s basis was $50,000 and the property is worth $150,000 at the time of that person’s death, the new owner would have a basis of $50,000. And if that person sold that property for around $150,000, that person would have a profit on the sale of about $100,000 even though the new owner might have only owned the property for a very short period of time and the property never appreciated during that time of ownership.
In the same example, the new owner would inherit the property at $150,000 and then sell for $150,000, pocketing the cash without paying tax.
We generally tell people to avoid taking title through a quitclaim deed for these reasons. However, we might favor living trusts over transfer on death instruments. Living trusts have been around longer and don’t create headaches for title insurance companies. For more details, consult an estate attorney or knowledgeable real estate attorney.
More on Topics Related to Transfer on Death Deed vs. Quitclaim Deed
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Should You Have a Transfer on Death Deed, a Living Trust or Both?
Using a Quitclaim Deed to Put Property in Living Trust
What Happens to My Taxes When I Use a Quitclaim Deed to Transfer Property?
What Happens to a Quit Claim Deed When a Spouse Dies?
How to Determine Legal Ownership of Quitclaimed Land
Are Transfer on Death (TOD) Deeds Smart?
Quit Claim Deed Tax Implications: Selling House with Multiple Owners
Quit Claim Deed and Mortgage Responsibility: Getting Name Off Mortgage
My mother made a quit claim deed for her condo to me and my sister. This was in 2013. My mother is still living. I am 61 and my sister is 55. Both my sister and I are still working.
Do we owe a gift tax on the property now? Will we have late fees for the tax at this point?
Does our mother owe a gift tax on it now?
my father pass away almost 3 years ago. the property i live in my father didnt transfer it to my name cause since we both have the same name he thought it wouldnt be a problem , but they put his middle name. i have lived there for 20 years, how do i go about and get this in my name.
If i owe a balance on my home and quit claim it to a relative
When i die does the relative get to keep the home if he meets the pmts
If my brother was given a title to a house (quit claim deed) before my grandmother’s passing, would he still have complete claim over the property? He moved to China and I am told I have to go through a probate process.. The house is in my name only and the property is in my brother’s name. Do I still need to go through a probate regardless, or can my brother transfer it over to me? Also, do the immediate family members and sinlings of the deceased have any claim over the property?
If my mother quit claimed her house to my sister, and my mother just died a month and a half ago is there any chance of me the sister getting a part of the property.
See there is a will they are refusing to show me and I do not understand why as my sisters name was on her life insurance and 401k.
My persons lefted me with a quitclaim deed, now that they are both deceaced, what do I do with it. I live in their house still paying the bills and real estate taxes, they have a will and I’m the executive of it.
Do I need to get a new deed to the house with my name on it now, or just don’t worry about. Do you think I need to see a lawyer.
My mother passed away 2 weeks ago and she left the house that I was renting from her to my 3 youngest who are 7,6 yrs old and 11 mths old. Can I somehow put the house in my name? The reason I ask is so I can transfer the mortgage loan who is now in my fathers name to me, that way my Father doesnt have to worry about having 2 mortgage loans in his name????
my sister died and left me her house. Can I use a quit claim deed.
My parents are both deceased no will or quit claim deed has been found but my mother before her paying stated to several family members the house would be mine , she still owes on it and I’m on none of the paperwork, what do I need to do
My father died several months ago. He left no will. I was making payments. My brother said he would, as I was going to move. He did not make two months payments. I then picked up where he left off. The credit union did not receive a deaths certificate for some time. As soon as they received it, they pre-forclosed. They will not allow any of us siblings to discuss this account. How can I get them to discuss this with me?
My grandfather died in 2001 he has a home I live in now so on quit claim deed do I put his name down or my grandmother name. How would I go about putting house in my name.
Live in Michigan. I am executor of estate still after three and a half years. Stayed in the house because I am the only one listed on the will to receive residual property including home. 85k of 121k is still owed. Out-of-pocket I paid each month principal interest taxes and home insurance.
I feel it’s time for me to put this home in my name as stated in the will. Help please as I don’t know if it this is a transfer or an assumption or what not but it has gone through probate. Everything else is distributed, Taxes, debts paid off now. Vehicles and both are in my name.
Is it possible to do it assuming structure for payment from the deceased or must I requalified through the bank for a loan to pay it off first? What legal instrument should I be using to do this?
I’ve been living on a pice of property for 25 years.Ive paid the taxes moved a trailer 14×70 built a storage shed/garage.my children went to school and graduated from here.my step fathers brother and family abandoned the property and moved to another town. Now my dad and his brother have passed his children are harassing and threatening my wife and I on many occasions my father and uncle said the property was mine and were going to get it transferred how do I get it in my name
Cheming county upstate New York
My father left me everything when he died, 10 acres and a house, it went to probate and everything is done. My question is I’m married but getting a divorce soon, if my husband made up a quit claim does that add him to the property deed? I thought I was only signing something for him to help pay taxes, now I’m worried about him getting half of my inheritance. I live in Texas. My husband went with me and my Father when the will was made and my Father told his attorney and my husband that he did not want my husband in his will in case anything happened between us. Now I am so worried that I may loose half.
Husband passed away 15 years ago. Now that I have paid off house they telle they can’t put it iny name becauseor mortgage did not day right of survive ship.. what do I need to do so my children will not have problems
Comment…i want to buy a house i check on the tittle deed the person that is on the tittle deed is the seller and his wife, but suddenly the his niece is saying the house belongs to his parents what should i do
as the lawyer is busy with the
I was making house payments to my ex for a home I’ve lived in over 20 years. He helped me get it from a man that bought it on court house steps. He had to take my name off so he could get loan. I’d been paying him since 2005. He got cancer in 2012 and quick deeded the house I was paying to or girls. he said I would be able to live in house and girls wouldn’t kick me out. He died 1/19/2013 it is now 10/16/17 I pay the girls $300 mo. for taxes and insurance. They want to sell it and evict me is there anything I can do?I love my home
My mother and I are on a quit claim deed.my mother passed 3 1/2 months ago does my house have to go on the inventory for the Estate? Can you please help?
How can you cancel a quit claim deed. I know an elderly lady who got tricked into sighing it by two scam artists
My mother is 76 and I her son is 46. We are both on the House deed. Can she do a reverse mortgage with me on it.
Can a quit claim deed exclude the wife of the owner having rights of survivorship to property
Go see your attorney. That is the answer to every single question here.
Sometimes that is the answer. But it isn’t always the answer. TODs are complicated and very local.
Thanks for your comment,
Ilyce Glink, Publisher
There is a registered Quit Claim Deed in the name of a couple, but the spouse have died, how to proceed to eliminate the name of the spouse of the Quit Claim Deed?
Ok. Already we did and register and Affidavit of Survivorship to removed the died spouse from the title (registered Quitclaim Deed). Now the problem is that in Registry says that a new Quitclaim Deed most be register where appears the name of the survivor wife as a sole owner. Can not find a model of that kind of QCD. Can someone help me, please?
My sister died and left the house stating that as long a my brother in law live he could stay in the house,she has one son did not leave a will what has to take place to get the house in his name.
What happened..similar situation
My father passed away 2/2019. When my stepmother passed in 2009 he quick claimed her daughter on title to avoid probate. a loan was taken out in my fathers name and my fathers stepdaughter not adopted 3 months after in the amount at the time 21,500 half the worth of the property. Today 2019 she is trying to sell the property for 129k. She is not his daughter. Do we ( 3 children of my fathers) have claim to any of the proceeds of the sale
What good is this site when there are no reply’s to any questions????
I try to get to as many of the questions as possible Unfortunately, I’m only one person. But there are thousands of pages of answers to questions all over the site. I hope you can find something that will help your issue.