What are the tax implications of adding someone to a deed?
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What are the tax implications of adding someone to a deed?
What are the tax implications of changing real estate property ownership from single ownership to joint ownership?
Asked on April 3, 2012 under Real Estate Law, Virginia
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
This is a complicated question, and one for an accountant, particularly a CPA, not an attorney; you want to consult with a knowledgable tax professional about this before, since there are undoubtedly better and worse ways to structure the transaction.
As a general rule, WHENEVER a person receives something of value, whether that is money, securities, personal property, payment for him or her of expenses, or real estate, that is a taxable event. (The only major exceptions are receiving return of loan principal you loaned to someone else; reimbursement of expenses from your employer, such as if you had to put business travel on your credit card; a tax refund; and certain specific payments exempt from tax by law, like Roth IRA distributions or life insurance.)
Therefore, there will be tax consequences based on the value of (which takes into account equity in) the property and the share thereof given to the other person. However, whether the person is gifted his/her interest, or pays for it (and if so, does he/she pay fair market value or some nominal or discounted price) will affect who pays how much taxes.
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