Deeds
Transferring titles with a deed can be tricky and have tax consequences. For many, starting with a review of state laws on real estate deeds or consulting a real estate attorney is a beneficial idea. Whether you are a seller or buyer, a giver or a receiver in a real estate transaction, being prepared and knowledgeable is essential for success.
If you know what type of deed you need, such as a quitclaim deed, a gift deed, or a beneficiary deed, we can help you with the transaction.
OUR SERVICE TO YOU
- Draft the deed accordingly.
- Email the draft of the deed to you for review and approval.
- Have your signature notarized as required by laws.
- Submit and record the deed with the county recorder’s office.
Quitclaim Deed
A quitclaim deed is a legal document used to transfer property ownership from one person to another without making any promises about the property’s title. This means that the person transferring the property (the grantor) isn’t guaranteeing that they actually own it. Quitclaim deeds are often used to transfer property between family members, add or remove a spouse’s name after marriage or divorce, or fix mistakes in a title.
Creating a quitclaim deed is straightforward. You need to fill out a form with details about the property and the people involved, get it notarized, and file it with your county clerk’s office. It’s important to note that using a quitclaim deed can have tax consequences, as the transfer is often considered a gift, which might be subject to gift taxes.
While you don’t always need a lawyer to file a quitclaim deed, it’s a good idea to consult one to understand the legal and financial implications fully. Or talk to an enrolled agent about your decision and see if there is an tax implications.
Gift Deed
A gift deed is a legal document that lets a property owner (called the donor) give their property to someone else (called the donee) without getting any payment in return. This is often done between family members or close friends and can also be used to donate property to charities.
How Gift Deeds Work:
The gift deed must clearly say that the property is being given as a gift and not sold. It should be signed by the donor, and usually, it needs to be notarized. Sometimes, witnesses are also needed depending on local laws.
The donor has to deliver the deed to the donee, and the donee must accept it for the transfer to be valid.
Recording the deed with the local county recorder’s office is often recommended to make the transfer official and public.
Tax Implications:
The person giving the gift may need to pay a gift tax if the gift’s value is above a certain amount. In 2024, you can give up to $18,000 to each person without paying a gift tax. If you give more than that, you might need to report it to the IRS, but there are lifetime exclusions that allow you to give a lot more over your lifetime before paying taxes.
If the person who gets the property (the donee) decides to sell it later, they might have to pay capital gains tax. This tax is based on the original price the donor paid for the property, not its value when the donee received it. This can mean a big tax bill if the property’s value has gone up a lot since the donor bought it.
Giving property away through a gift deed can help reduce the size of the donor’s estate, which can lower estate taxes if the estate is worth more than a certain amount when the donor dies.
It’s a good idea to talk to a tax advisor or attorney to understand all the legal and tax implications before creating a gift deed.
Beneficiary Deed
A beneficiary deed, also called a transfer-on-death (TOD) deed, lets you name someone to inherit your property when you die, without going through probate. This means the property goes directly to the person you choose, saving time and money.
How It Works:
You stay the owner of your property while you’re alive. You can sell it, take a loan on it, or change your mind about who gets it.
When you die, the property automatically goes to the person you named in the deed. This avoids the long and costly probate process.
Tax Implications:
No Gift Tax. Naming a beneficiary doesn’t count as a gift, so you don’t have to pay gift taxes.
Step-Up in Basis. The person who inherits the property gets it at its current market value when you die. This helps reduce capital gains taxes if they sell it later.
The property’s value is added to your estate’s total value.
For more help and to make sure a beneficiary deed is right for you, talk to an estate planning lawyer or a tax advisor.
Correction Deed
A correction deed, also called a corrective deed, is a legal document used to fix mistakes in a previously recorded deed. These mistakes could be typos, wrong names, incorrect property descriptions, or other errors that need to be corrected to make the records accurate.
1. Purpose: To fix minor errors in the original deed, like misspelled names or wrong property details.
2. Not a New Transfer: It doesn’t transfer the property again; it just corrects the existing deed.
3. Execution: Usually, the people who signed the original deed also sign the correction deed. Sometimes, only the person who made the mistake needs to sign.
4. Recording: The correction deed must be recorded in the same county office where the original deed was filed to update the public records.
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