Can you change the name on the title of a home without penalties?

Question

A family member wanted to change the title of ownership on a home in CA without penalties in order to sell the home and move. As far as I know there are penalties that come with this, any advice? for context, the person whose name is on the home is deteriorating in terms of mental health and originally bought the home for my family member to take primary residence in. The home is in a trust and has accrued quite a bit of equity, but a transition now would be ideal. I am quite new to this asset class and would appreciate any help or education, thank you.

Andrew Crinnion · Answer

I would consult your CPA, if the house is gifted (while they are alive) to someone else then the recipient no longer receives the step up in basis. Meaning when the recipient later sales the house they will have a higher tax bill. For example, person A buys a home back in 1950 for $50,000 today that home is worth $1,050,000. If this home was gifted to person B while person A is alive, then person B's basis in the house will be $50,000 so when person B goes to sell they will have a $1.0m taxable gain (assuming no improvements). Instead if the home was inherited by person B, person B's basis in the home would be the market value at date of inheritance in this case $1,050,000. If person B sold it the next day for $1,050,000 they would owe no tax.

Brian Garlington · Answer

There is also the possibility of a due on sale clause and there will certainly be fees to change title.

Angela Zanti · Answer

I was added to the title for 500.00 using a real estate attorney. Call a local title company and they can help. I could only be added because there’s still a mortgage but if it was paid off they should be able to just change the name. Depending on the situation it might be better to just add the name and keep the org. Owners name on it too. This way the relative living there could still apply for a “first time home buyer’s credit”.

Lance Lvovsky · Answer

I strongly suggest speaking with a tax advisor knowledgeable in this area. Changing the name on the deed of a real estate property is not as simple as going to an attorney to do it. Well an attorney may say so but they may not necessarily tell you what the tax implications are. For example, in the situation, you have to be careful of any gift tax that may be triggered by transferring ownership of the property. If the property is in a revocable trust and that revocable trust put up the money for the property, they would likely be a gift. It doesn’t mean gift tax is owed but it does mean a gift tax return likely needs to be filed. If the property is owned in an irrevocable trust, then you need a competent tax professional to review the trust agreement and give you advice as to whether or not the property can be distributed from the trust.

Stephanie Spencer-Boldon · Answer

I know of no penalties but a fee here in Georgia. I think your best recourse is to talk with an attorney. If the person on title has diminished capacity, can they legally sign. Plus, there's the issue of is family trying to hide assets. Talk with an estate or probate attorney.

Eliott Elias · Answer

I'm not sure there will be penalties, it does cost to switch title to a different name. In Texas it's about $2,000

Peter Walther · Answer

I recommend you speak with a competent CA real estate/estate planning attorney to be more comfortable that what you do won't create problems.

Your post is unclear.  Is the person whose health is deteriorating the Trustee of the Trust that holds title?  If so, is there a substitute Trustee named in the Trust?  If yes, would the current Trustee or the Beneficiaries of the Trust be able to appoint the Sub as the new Trustee?  These are a couple of the questions I think you need to pose to the attorney.  I hope this helps.

Allan Smith · Answer

Why would there be penalties? Properties change names every day. Some mortgages have a due on sale clause if that's what you mean. But as long as they are collecting payments they usually don't care. A quit claim deed is often used and is very cheap to file. Not sure how that affects title insurance.

just ask a local title office or attorney your questions.

Can you change the name on the title of a home without penalties?

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