Lindsay is a freelance personal finance writer currently pursuing her Series 65 license. She enjoys helping readers learn money management skills that improve their lives.
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
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If you’re listed on a property deed, you legally own that home.[1] But you might want to give up or change your real estate ownership for multiple reasons other than selling your home. You might want to offer that property as a gift to a loved one, for example, or add a spouse to the house title if you get married.
Changing who’s listed as the owner of real estate property isn’t as simple as drafting a will on a napkin. It’s a complicated legal process that comes with many potential pitfalls. Here’s what you should know about transferring the title to your home.
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Types of property transfer
Residential properties can change hands in several different ways. The specific requirements for each process — along with the legal and financial considerations — can vary, so it’s a good idea to consult with a financial advisor, tax professional, or real estate attorney.
Here are some of the most common types of transfers.
Selling the property
One of the most common ways for a property title to change hands is through a home sale. The seller and the buyer will negotiate a real estate purchase agreement (also known as a property sale agreement) outlining the purchase price and the sale conditions.[2]
Gifting the property
Parents sometimes offer gifts of real estate to their children or grandchildren, while other homeowners may choose to donate extra property to charitable causes they support. This requires careful planning, and it’s a good idea to consult with an estate lawyer because tax rules can be complex.
Transfer through inheritance
People commonly leave real estate to loved ones by including them in their last will and testament. This can be easy to do, especially if you use an online legal technology company or software program to draft your will. But the executor of your estate and your heirs may face additional legal snarls to sort out after you’re gone.[3]
Adding or removing a co-owner
You might want to shuffle who has the title to the home if at least one person will stay listed on the house deed. This commonly happens when people get married or divorced, for example, or if they buy out other co-heirs to an inherited house.
Steps to transfer home ownership
You can transfer your home to a new owner by following local regulations in your area. This may be different for certain types of transfers, but here’s what the general process looks like.
Step 1: Review the existing mortgage
If the owner is still paying off a mortgage, one of the first steps is to check with the lender to see if the new owner can take over the existing mortgage. If not, it’ll likely become due in full when they transfer ownership to the new party. Unless the new owner is able to take out a new mortgage, the old owner will have to pay off the remaining mortgage immediately.
Step 2: Obtain a property appraisal
A grantor must report gifts valued at more than $18,000 to the IRS at the end of the year.[4] Given the current housing market, most real estate transfers will exceed these limits. You’ll report that gift using Form 709, which requires you to report the “fair market value” of the gift by getting an appraisal done. Appraisals typically cost $300–$500.
Step 3: Draft and review transfer documents
Transferring ownership of a property is a legal transaction, and, as such, you’ll need certain documentation. In addition to drafting up a new deed and filing it with the county, you may need to file a gift tax return with the IRS.[5] You may be able to handle this yourself, but it’s still wise to consider working with experts in estate planning to ensure the transfer goes through correctly.
Step 4: Notarize and record the deed
In order for a deed transfer to be valid, the grantor must sign it in the presence of a notary public and then file it with property records at the county clerk’s office. Real estate laws can be complex, and many things can potentially go wrong with the different deed types, so it’s a good idea to seek expert advice when ownership changes come into play.
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Essential legal documents required for the transfer of home ownership
The basic legal instrument used to give someone ownership of real estate is a deed. This contains a legal description of the property, the names of the current owners, and the people who will become the new property owners. Some local jurisdictions have other requirements. The grantors will need to sign the deed and file it with their county clerk.
Different types of deeds work in different ways. Quitclaim deeds and gift deeds are the most common types of deeds people use to transfer ownership of a property between family members, for example. General warranty deeds, warranty deeds, limited warranty deeds, and special warranty deeds all offer varying levels of guarantees about the home you’re transferring.
Home ownership tax implications
Although it’d be nice to simply hand property ownership over to someone without any extra costs, the reality is you’ll likely be subject to one or more types of real estate transfer tax.
Different levels of government charge these fees, including federal, state, county, and even city levels.
Here are a few types of taxes that may apply:
Gift tax: The annual gift tax exclusion is $18,000, and donors must report property transfers over this amount to the IRS. You’re allowed to give away up to $13.6 million during your life or after you die before you’ll have to pay gift taxes, though.
Transfer tax: State and local governments may tax a percentage of the home’s value, and it’s often the person transferring the property who pays this cost. Some governments waive these costs, such as for tribal members selling tribal land inWashington state.
Capital gains tax: The person receiving the property will need to pay federal taxes on a larger share of the property when they go to sell it since they didn’t pay anything for it.
Important Information
It’s a good idea to chat with a tax advisor who can help you make sense of the rules. You don’t want to make any mistakes in calculating your tax rate, especially since real estate is such a valuable asset. You could be stuck owing a huge tax bill, and that could quash the entire reason for transferring the property in the first place.
Financial implications after the transfer of home ownership
Giving someone the property rights to your home is a generous and valuable gift, but it’s not without its costs to the grantor or grantee. Here are some things to consider:
Mortgages
Giving away a piece of real estate doesn’t wipe out the mortgage for the giver; it only makes it due immediately and in full, in most cases. The grantee will need to get a new mortgage for the home, or they may have to sell it.
Homeownership expenses
It’s good to ensure the recipient is able to handle the costs of homeownership, including things like property taxes, repairs, and utilities. They may need to speak with an insurance company about obtaininghomeowners insurance.
Loss of equity
The person giving away the home should understand they’re giving away all rights to the home. They won’t be able to sell it or take out a loan against it later if needed, including reverse mortgages.
Cost basis when selling gifts
The sale price the giver originally paid for the home will become the starting point for calculating any profit the recipient earns if they sell the home. You’ll use this to calculate the capital gains tax owed, and that can be substantial in the case of real estate held for decades.
Transferring home ownership to a trust, minor, or during a divorce
Depending on the circumstances of the transfer, you may need the help of an attorney because you may face additional legal obligations or need a specialized written document.
Getting a divorce
If someone will be keeping the house, the other person can file a quitclaim deed that relinquishes their ownership interest. The person keeping the house would then need to refinance the loan in their own name or pay for the share of the home they’re buying from their ex-spouse.[6]
Transferring ownership to a trust
A trust is a separate legal entity from yourself, similar to a corporation, and it’s used to hold assets such as money or real estate for the benefit of a specific person. This can alsobe you while you’re alive, but in the event of your death, you can designate who’s next in line to benefit from ownership of the property.
A trust is a popular option because it’s the best way to keep your assets from getting tied up in probate court. Trusts can instead pass straight to your heirs with less tax burden. They’re costly to set up, though, and they require the services of an attorney. A less comprehensive option without setting up a full trust is a transfer-on-death deed.
Transferring ownership to a minor
It’s generally not advised to hand ownership of real estate over to a minor directly since they won’t be able to sell it or do any other legal transactions with it until they’re 18 years old. Instead, you can create a trust and name them as the beneficiary for after you pass on.
Another option is naming an adult custodian to manage the real estate for them under the terms of the Uniform Transfers to Minors Act until they’re of age.
Transfer home ownership FAQs
Giving away your home is a complex process, and it’s best to speak with a team of experts to get the best tax and legal advice. Here’s some quick information to guide you as you go along.
What documents do you need to transfer home ownership?
A deed is the basic document used to transfer home ownership. Many types of deeds exist, but a quitclaim deed is the most commonly used. Depending on your situation, you may need a home appraisal to establish the value of the property, title insurance, as well as other tax and financing documents generated when a home changes hands.
How long does the home ownership transfer process typically take?
Technically speaking, the actual transfer of ownership only takes a few seconds, becoming official as soon as you sign the new deed in front of a notary public. But it can take several days or weeks to get the help of an attorney and finalize the process with your county clerk’s office.
Are there any taxes or fees associated with transferring home ownership?
Yes. You’ll need to file a report with the IRS if you’re giving away real estate valued over $18,000, although gift tax regulations allow you to give away up to $13.6 million tax-free during your life.
Can you transfer home ownership without the help of a lawyer or real estate agent?
It depends on where you live. Some states require attorney involvement in the real estate transfer process, but that’s not the case in most areas of the country. Even if it’s not required, it’s a good idea because real estate transactions — especially ones done for free — are subject to a lot of rules, and the tax and financial considerations can be huge.
What should you do if there’s a mortgage on the property being transferred?
First, contact the mortgage lender. Most mortgages have a due-on-sale clause that requires the owner to immediately pay off the mortgage in full when they transfer it out of their name. Many lenders will allow qualified family members to assume, or take over, repaying the mortgage where the previous owners left off. If not, they may need to take out their own mortgage loan.
Lindsay VanSomeren is a freelance personal finance writer living in Suquamish, WA. Her work has appeared with FICO, Credit Karma, The Balance, and more. She enjoys helping people learn how to manage their money better so they can live the life they want.
Lindsay has been a contributor at Insurify since October 2022.
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
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