Answer: Turning over ownership to your daughter is relatively simple. An attorney draws up a new deed naming her as the owner of the property, and both of you sign it. The deed is then filed in your county public records office. Your daughter also takes over your cost basis for the property. And that's it.
Your state has no gift tax. As far as the federal government is concerned, the IRS allows each of you to give your daughter $14,000 a year free of any gift tax. If she is married and you include her husband on the title, the gift amount will be double.
You'd file a gift tax return, but you wouldn't owe any actual tax. The current value of the house minus that $28,000 (or $56,000) would someday be subtracted from what you could leave free of estate tax upon your death(s).
If you have little in assets and are thinking about possibly qualifying for Medicaid health coverage, the current value of the house will still be considered your asset for a look-back period of five years after the transfer.
By the way: The tax advice would be different if this house were your own residence.
Buyer's Shaky Credit
Dear Edith: We sold our house on our own, with no Realtor, and have a signed a contract with a buyer. They need to get a mortgage, and we are wondering what to do if they have trouble with the loan. Do we have the right to know information about their private finances? -- K. I.
Answer: You're right to be concerned, and you should have checked their credit information before accepting their offer. Your agent would have investigated at that point.
Monitoring the progress of their loan application is important. Their income will be verified with their employer(s). If that's impossible, they may bring in past income tax returns.
Occasionally, unpleasant surprises turn up with credit history. The buyer may have forgotten or unknown judgments against them. This is not fatal - they could clear them by paying them off. More serious is something like a bankruptcy the buyer "forgot" to mention, or large outstanding debts.
You have a right to be notified promptly of any problems, for time is money in your situation. If the transaction might fall through, you should be told at once. Again, your broker would have been monitoring all this.
If things look shaky, you could put your house back on the market "subject to the nonperformance of the existing contract." That would enable you to search for another buyer in the meantime and even accept a back-up offer. Of course, you'd have to find prospective buyers who are willing to wait around to see what happens. Let's just hope all goes well.
Contact Edith Lank at www.askedith.com, at firstname.lastname@example.org or at 240 Hemingway Drive, Rochester NY 14620.Copyright 2017 Creators Syndicate Inc.