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I wanna do quit claim deed on my house to my brothers name, if i do so does he have to pay any taxes for getting house or no

Marietta, GA |

there is still monthly payments for house what he would continue paying for, we have $100.000 left of payments of house, we dont wanna do transfer if have to pay some huge tax bill as person who gained house

Attorney Answers 3

Posted

If you give your house to your brother, then under federal gift tax law, you would be the one potentially required to pay tax on the transfer (Georgia does not have gift taxes, and neither do any other states except for Minnesota and Connecticut). However, federal gift tax law contains both an annual exclusion which might cover up to $14,000 of the value of the house (assuming you've made no other gifts to your brother in that same year) and prevent that portion of the gift from being taxable, and your personal unified credit against federal gift and estate taxes (which effectively allows you to make a total of $5,250,000 in taxable gifts for 2013, if you haven't made prior taxable gifts) would likely then apply to prevent you from actually having to pay any gift taxes on the rest of the value of the gift. Your brother, as the recipient of the gift, would not be the one who had to pay gift taxes.

HOWEVER: there are so many other factors which could create trouble for you and for your brother in the gift you propose to make that I would not have enough room in this forum to list them all. Here are just two examples: 1. If you are relieved from any debts as a result of the transfer, you could end up with discharge of indebtedness income, which is taxable as ordinary income to you to the full extent of the debt you no longer are required to pay, even though you've received no cash. 2. If you are insolvent or near insolvent at the time of the gift, your creditors could potentially undo the gift as a fraudulent transfer, resulting in both of you losing the house and other negative consequences.

Before you actually sign anything over to your brother, you really, really, really, really should sit down with an attorney who can help you review the reasons you are thinking of making this transfer, analyze all relevant items of information about your situation, and advise you of all possible positive and negative results of the transfer. IF and ONLY IF that analysis results in a decision that it will be a good idea (or at least not a horrible idea) for you to make the gift, should you actually make it. You should also have a qualified attorney help you prepare the deed, IF you decide to make the gift. Poorly done deeds can result in the property not transferring at all, or transferring but with clouded title, which could create additional and expensive problems down the road.

This answer is not intended to provide you with specific legal advice regarding your situation, or to create any attorney-client relationship. The intent is only to provide general information. You should be aware that you cannot rely on this answer to provide you with any protection against tax penalties. You should always consult your own attorney in order to obtain legal advice.

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Posted

ty for info, waz affraid there might b tax penalty about it

Posted

If the house has a net value of more than $14,000, then it is a gift that must be reported. Unless the house has a net value of more than $5,250,000 plus $14,000 (those numbers double if you are married and your spouse splits the gift), there willb e no gift tax. You should talk to a competent CPA before you do this.

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Posted

You don't say WHY you want to transfer your home to your brother so will assume you have a creditor claim issue that is making you seek a way to protect your assets from such claim. Am I correct? If so as I suspect then you need to be aware of what is known as fraudulent conveyance laws. If so then the transfer to brother will be undone and the home lost to creditors if you do a simple gift. There are ways to make such a conveyance to defeat creditors but you will need professional advice after all facts are known.

My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained. Please click "helpful" or "best answer" if my answer added any value or add a "comment" if you have more info for me to help you get a better answer.

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