Transferring Property to Family: What to Know About Gift Deeds

A gift deed signifies a voluntarily title transfer from a “grantor” (the giver) to a “grantee” (recipient). Recipients are often loved ones or charities.

A home’s transfer through a gift deed happens without consideration — meaning no money or thing of value is given in return. The deed states that the title is conveyed for no consideration.

For a valid gift deed, the grantor must deliver an immediate gift of the property, no strings attached. The recipient must accept the gift. (Recipients always have the choice of whether to accept or refuse.)

A lawful gift deed identifies the parties and their addresses, and an accurate legal description of the property. The completed deed should be filed with the Recorder of Deeds in the county where the property is located. The recorder’s office has specific local procedures, fee schedules, and payment processing systems. Record the deed promptly; some states may void gift deeds left unrecorded for a certain time period.

Looking for forms? You can find our deed forms here. The forms on this site are continually updated to comply with your state and local rules.

Nuts and Bolts: Components of a Gift Deed

Properly completed quitclaim deeds enable simple transfers, without title searches. They can easily transfer ownership interests to loved ones or charities. Note: Unlike a warranty deed, a quitclaim doesn’t guarantee that the recipient is getting a free and clear title.

The effective gift deed contains several key traits and components:

• The grantor (giver) signs the deed.
• If co-owners give away property, all owners and their spouses (if any) sign the deed transfer. (Spouses, even non-owners, sign to release any marital rights they might have.)

• The grantor’s full name and marital status; and the recipient’s full name, marital status, and actual street address all appear on the deed.
• If there are multiple recipients, then vesting language, as indicated by state law, describes how the recipient holds title, such as by tenancy in common, joint tenancy with survivorship rights, or some other form of co-ownership.
• A full and accurate legal description of the property appears.
• Deed restrictions limiting the use of the property appear.

To be sure your deed measures up to the statutory requirements in your state, view available deed forms on Deeds.com.

Note on marital status language: For some couples, this constitutes sensitive information. If you need to quitclaim without declaring marital status, request a go-ahead from the title company, explaining your preference that marital status does not appear on the recorded deed.

Giving Your Home to Someone: Financial Effects

Be sure to review state and federal gift tax rules. A sole owner who brings on a loved one as a joint owner for no consideration makes a gift of 50% of the title’s market value. The government considers any deed transfer a gift when there’s no consideration (or when consideration is less than your home’s market value). 

Please note:  

• For a gift to a non-spouse, the deed transfer can trigger inheritance and/or gift taxes. (As most givers don’t max out their lifetime gift exemption, most don’t pay gift tax.)
• If you give your home to someone else and the recipient ever decides to sell the gift, the recipient’s cost basis will be what you originally paid for the home. Therefore, your recipient could wind up one day having to pay taxes on the capital gains on the home’s appreciated property value. In contrast, beneficiaries of wills or trusts enjoy offsets to capital gains. The home’s rise in value during the time you (the giver) lived in it will not be taxed.
• After the transfer, a recipient who derives income from the gift must pay state and federal income taxes. (The recipient need not declare the amount of the gift as income.)

So remember, gift transfers worth more than the allowable exemptions are taxable events, and it’s up to the giver to pay them.

Note: There are several benefits to selecting popular alternatives to the gift deed, like trusts and LLCs, which may offer tax advantages.

Thinking of transferring real estate? At Deeds.com we can help you create your quitclaim deed, or another deed form that fits your or your loved ones’ needs.

Quick Reminders

• Do you have a mortgage? When an ownership interest changes hands, mortgage companies may accelerate a loan’s due date. So, get a go-ahead in advance from the company before transferring your gift deed.

• Will the owner’s homestead tax reduction be impacted? Don’t forget to find out before making a deed transfer.
• Check with the home county’s deed recording office to learn if transfer taxes will be required in your case.

Gift Deed Versus Passing the Home’s Title Through a Will

Unlike a will, a gift deed transfers homeownership while the giver is alive. A gift deed cannot be contested once it is signed and delivered. The transfer is final.

Gift deeds can also convey just a partial ownership interest in a home. If the giver dies with a partial ownership interest, the title will still go into probate along with other willed assets. The deed holder should know the difference between a life estate deed and a gift deed. If the giver intends to continue living in the home, the transfer is unlikely to be deemed a gift for tax purposes. (More on tax below.)

A will is usually the simplest way to transfer the deed. When the beneficiary receives the deed from a deceased owner through a will, the deed comes certified by the local probate court. But some people prefer to make a present gift out of concern that their will could be challenged by others.

Learn about quitclaiming a home to a loved one versus leaving the home in a will.

Gift Deed Versus State-Specific Beneficiary Deed Options

Your state might recognize and provide transfer on death forms. These “beneficiary deed” forms let owners pass ownership down to a designated person.

If your state allows it, you may fill out an Affidavit of Death form, sign it with a notary, and thereby designate the beneficiary of your choice. After your death, the recipient gets the title. Careful! Your beneficiary will also wind up with any debt secured to the home.

The transfer on death deed is more flexible than an immediate gift transfer. The recorded form is revocable, by recording a new transfer on death deed naming a different recipient. Selling the home would also extinguish the form.

Compare and contrast the use of transfer on death deeds versus wills here.

Note: Your situation is fact-specific. Additionally, deed transfers must follow the laws of the state where the real estate is. This article is provided for informational purposes only and is not a substitute for the tailored advice of an attorney. For questions on federal and state taxation laws, consult a tax specialist.