What are the tax liabilities if we put our children on our home title? Why? 5 Answers as of May 18, 2015

We have 2 adult children and we want to try to avoid probate. What are the tax liabilities associated with including them on our house title?

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James Oberholtzer, Attorney at Law
James Oberholtzer, Attorney at Law | James Oberholtzer
In addition to likelihood that they will fight about the ownership after you are gone, you lose the step up in basis that would avoid income taxes on the increase in value during your lifetime.
Answer Applies to: Oregon
Replied: 5/18/2015
Ronald K. Nims LLC | Ronald K. Nims
The main tax considerations are involved with selling the house. Since your children don't live there, their portion of any gain on sale isn't shielded by the residence exemption. Also, if you die owning the house, they inherit at the date of death value but if you gift the house, they step into your basis, likely what you paid for the house. The bigger consideration is that if they are owners of the house, it could be foreclosed to pay their debts. For this reason, you should never give them an outright ownership in your house. If it makes sense to transfer ownership, do it through a trust. Then the kids debts can't be liens on your home.
Answer Applies to: Ohio
Replied: 5/18/2015
Law Offices of Robert Beatson II | Robert Beatson II
Dear Sir/Madam, The facts need to be carefully reviewed and analyzed. An experienced tax attorney/accountant should be able to handle this. I have 30+ years of experience and further information about my tax/law practice is at www.beatsonlaw.com Please call or e-mail me if I can help you now or in the future. Thank you.
Answer Applies to: Maryland
Replied: 5/18/2015
Robert E. Giffin | Robert E. Giffin CPA
Do not put minor children on a deed. Use a trust to do what you want to do
Answer Applies to: Ohio
Replied: 5/18/2015
The Schreiber Law Firm
The Schreiber Law Firm | Jeffrey D. Schreiber
In my opinion that is a bad idea. The transfer subjects you to gift tax liability now and does not give them the better tax treatment available if the property was transferred after death. If your children now or in the future have a tax or judgment lien, that lien attaches to the house and would have to be cleared to remove the lien. If circumstances change in the future where you need to sell or refinance, if both of them do not consent to transferring the property back (without regard to the tax ramifications of reconveyance), then that option is not available. To avoid probate and avoid these possible problems, consult with an experience professional to have a trust created and place the house in the trust. For the money you would be charged to set this up properly and also avoid probate is money well spent.
Answer Applies to: California
Replied: 5/18/2015
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