Gift deeds convey title to real property from one party to another with no exchange of consideration, monetary or otherwise. Often used to transfer property between family members or to gift property as a charitable act or donation, these conveyances occur during the grantor's lifetime. Gift deeds must contain language that explicitly states that no consideration is expected or required. Ambiguous language, or references to any type of consideration, can make the gift deed contestable in court.

A lawful gift deed includes the grantor's full name and marital status, as well as the grantee's full name, marital status, vesting information, and mailing address. Vesting describes how the grantee holds title to the property. Generally, real property is owned in either sole ownership or co-ownership. For Kansas residential property, the primary methods for holding title are tenancy in common and joint tenancy. An estate conveyed to two or more persons is considered a tenancy in common, unless a joint tenancy is clearly expressed (K.S.A. 58-501).

As with any conveyance of realty, a gift deed requires a complete legal description of the parcel. Recite the prior deed reference to maintain a clear chain of title, and detail any restrictions associated with the property. The deed must be signed by the grantor and acknowledged by an individual authorized to take acknowledgements. All signatures must be original.

Record the completed gift deed with the Register of Deeds in the county where the subject property is located. Contact the same office to confirm recording fees and accepted forms of payment. In Kansas, conveyances of real property typically require a Real Estate Sales Validation Questionnaire, unless the conveyance is exempt. Because there is no exchange of consideration when real property is gifted from one party to another, gift deeds are exempt from this requirement under K.S.A. 79-1437e(4).

With gifts of real property, the recipient of the gift (grantee or donee) is not required to declare the amount of the gift as income, but if the property accrues income after the transaction, the grantee is responsible for paying the requisite state and federal income tax [1].

In Kansas, there is no state gift tax, but gifts of real property are subject to the federal gift tax. The person or entity making the gift (grantor or donor) is responsible for paying the federal gift tax; however, if the donor does not pay the gift tax, the donee (grantee) will be held liable [1]. For questions regarding state and federal tax regulations, consult a tax specialist.

In accordance with federal law, individuals are permitted an annual exclusion of $15,000 on gifts. This means that gifts valued below $15,000 do not require a federal gift tax return (Form 709). However, if the gift's value could possibly be disputed by the IRS, a donor may benefit from filing a Form 709 [2].

This article is provided for informational purposes only and is not a substitute for the advice of an attorney. Contact a Kansas lawyer with any questions about gift deeds or other matters related to the transfer of real property.

[1] http://msuextension.org/publications/FamilyFinancialManagement/MT199105HR.pdf

[2] https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

(Kansas Gift Deed Package includes form, guidelines, and completed example)

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