House transfer from husband to wife

Asked by John S, San Francisco, CA Fri Dec 14, 2012

Hi, I was wondering if the experts on here can help with my question. My parents own a home, paid off, with both names on the deed. However, my Dad would like to remove his name from the deed of the house making my Mom the sole owner of the house. Are there any tax implications to this transfer? Will the home value still be same (property tax issues) or will property tax now be assess on the current market value? They bought this home 25 years ago, so property taxes is fairly low based on the current city formula. Multiple phone call to the Assessor office in San Francisco have resulted in multiple different answer (amazing how one department can't give one answer). Thank you in advance.

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Sally Rosenm…, Agent, San Francisco, CA
Sun Dec 16, 2012
I second the answers. A quitclaim deed is the best way to transfer. But before you do, please contact an accountant. My real estate accountant is Robert (Rob) Dreyer, 415-474-2044 ext 11 or I think he is great but you may already have your own.

Good luck!
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Pacita Dimac…, Agent, Oakland, CA
Sat Dec 15, 2012
Not knowing the reason why your father would want to remove his name from the deed, you should at least know what the implications would be. I echo comments about the capital gains exemption -- for a couple it's $500K, but for an individual it's $250K.

Besides removing the name from the deed, are your parents undertaking other changes on their respective wills regarding inheritance or transfer of property?

Rather than posting your question on this board, you probably should consult an attorney who may bring up more questions and scenarios.

As for the value of the property --- removing one's name in the deed isn't going to change its value on the property tax records.

Good luck.
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Jed Lane, Agent, Petaluma, CA
Sat Dec 15, 2012
You should be consulting an attorney or a CPA with these questions as they are beyond the area of expertise and license of real estate agents.
That said I think there are not tax consequences even when doing an inter-family transfer. I say that because of the fact that when an estate passes to heirs the house's basis is raised to the current market value. This allows the heirs to sell the property without paying capital gains. But if the parents place the heirs on title before passing, when the heir sells they have to pay capital gains tax based on the difference between the old basis and the new market sales price.
If I was presnted with a listing where the mother had been granted sole title before the passing of the father I'd have to get legal advice for them. I think that she keeps the old basis value and then would have to pay the capitla gains.
Remember that if your parents sell before passing they can each keep $250,000, $500,000 total capital gains tax free. If you Dad removes himself and passes, the Mom sells based on the old cost basis she can only keep $250,000 tax free.
That is far more money kept in the family than any amount of property taxes.
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Lance King, Agent, San Francisco, CA
Sat Dec 15, 2012
Oggi is right. The easiest way to transfer is to do a quitclaim, which would release any interest on your dad's part in the property. However, I would consult an atty/cpa to discuss potential tax ramifications to see if there is a better way.
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allan erps,A…, Agent, Pearl River, NY
Sat Dec 15, 2012
Am not able to answer your question but do know that when home is ultimately sold the deduction for tax purposes does change. As of now there is a $500,000 deduction that will be cut in half with only one owner. Of course updates & repairs over the 25 years are deductible as well. Might want to consult with an Accountant as well.
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Walter 'Skip'…, Agent, Brea, CA
Sat Dec 15, 2012
In my opinion, there should not be a change in the property tax basis with this change. For estate tax planning reasons you should discuss this with a tax professional.
Good luck,
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Anna M Brocco, Agent, Williston Park, NY
Sat Dec 15, 2012
It's really in your best interest to consult with an attorney who specializes in real estate; don't just rely on online information...
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Oggi Kashi, Agent, San Francisco, CA
Fri Dec 14, 2012
One easy way would be for your dad to record a quitclaim deed. He'll be off the deed with no consideration so there should be no change in the property tax. And since this is not a sale, it should not affect the property market value.

Please consult your tax accountant to make sure there are no ramifications regarding their personal federal and state income taxes. Also they need to make sure there is a will in place since as the sole owner there is less protection from the government (compared to joint tenancy). In case your father is planning to purchase a new property as his primary residence he might want to take advantage of props 60 and 90 which allow homeowners to keep their old property tax basis on their new purchase.

There are many things to consider so their full long-term plans and goals need to be considered. Feel free to call me.

Oggi Kashi - 415.690.3792 direct
Broker Associate, Paragon Real Estate Group CA DRE 01844627
All data from sources deemed reliable but subject to errors and omissions, and not warranted.
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