My daughter has been unemployed for 2 years and I am paying her mortgages and all other expenses. She is my only child. I am thinking of selling the house after we do the quit claim. She will move in with me. She has credit card debts. Will I be responsible for her debts if we do the quit claim? Also can I still claim the original cost bases of the house when it was purchased?
You main concern seems to be taxes. So I reclassified this for you.
Regarding liability for your daughter's other debts, to the extent you have not paid reasonably equivalent value for the property, yes, you could be liable for her debts. That would require her creditors to learn of the transfer and sue you for a voidable transfer (formerly known as a fraudulent transfer). Unless the dollar amounts are significant, it's unlikely a creditor would do that. But they could, and it's completely their call.
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Is she gifting the house to you, or selling it to you? If she is gifting it, gifts take a carryover basis, so your daughter's basis would become your basis. This would be her original purchase price plus any major improvements (not repairs). If she is selling it to you, you take a basis of your purchase price. It is possible for a transaction to be part gift, part sale. The sale would result in capital gains treatment so you may have to pay tax upon the sale. You also may want to look at the past payments you have done for her mortgages and other expenses as being gifts made to your daughter and see if you were required to file a gift tax return. If you are at all worried about your daughter going through bankruptcy, you will want to consult with a bankruptcy attorney to make sure the transfer of the home to you will not be scrutinized or disallowed.
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