How to transfer my share of the house to my brother?

Question

My mother purchased a property on 2011 for 480000 in California. The current price of the house is worth about $900000. The house is registered with my name and my younger brother’s name as joint tenant. If I want to transfer my title to my younger brother, what is the best way to do this? Any tax implications?

Account Closed · Answer

Hey Kin, If you want to transfer your share of the title to your younger brother, the most straightforward way is to execute a quitclaim deed or grant deed transferring your interest in the property to him. This process is relatively simple and can be completed through a title company or real estate attorney. However, it’s important to ensure that the deed is properly recorded with the county recorder’s office to make the transfer official. You should consult a real estate attorney or tax advisor to handle the legal and procedural details.

From a tax perspective, there are several implications. The transfer may trigger gift tax reporting if the value of your share exceeds the annual gift tax exclusion limit ($17,000 per recipient in 2023). While this would not necessarily result in immediate taxes (because it can be offset by your lifetime gift and estate tax exclusion), a gift tax return (Form 709) would need to be filed. Additionally, your brother will take on your portion of the cost basis for the property ($480,000), which could result in higher capital gains taxes if he sells the property later at its appreciated value. California also has Proposition 19 rules to consider, which might impact property tax reassessments if the transfer is not between parent and child.

Joshua Thompson · Answer

Hi Kin,

Three quick questions come to mind that would impact your situation. Would you be gifting this to your younger brother or selling your interest to him? If you sell your interest, would you do it based on the current fair market price?

Did your mother pass away and you two inherit the home? If so you may benefit from a step up-in-basis. Depending on the value at the time of death and your basis you may need to file a gift tax return.

I would speak with a CA attorney to determine the best type of deed to file and a tax professional to gather more information. Hopefully, this will give you some information to consider before moving forward and questions to answer

Jason Malabute · Answer

Hi Kin,

Transferring your share of the property to your brother may have tax implications, including gift tax if the transfer is considered a gift. Any amount above the annual gift tax exclusion ($17,000 for 2023) counts against your lifetime exemption. Additionally, your brother would inherit your cost basis in the property, which could result in significant capital gains tax if he sells the property later. Selling your share at fair market value could avoid gift tax but may trigger capital gains tax for you based on the sale price and your cost basis.In California, the transfer may also trigger a property tax reassessment under Proposition 13 unless a specific exemption applies. A quitclaim deed is a straightforward way to transfer ownership, but it doesn’t address tax issues. It’s crucial to consult a real estate attorney and tax advisor to structure the transfer in a way that minimizes tax consequences and aligns with your objectives.

Ashish Acharya · Answer

@Kin Lay To transfer your share of the house to your brother, you can use a quitclaim or grant deed, but there are tax implications. If you gift your share, it may trigger gift tax filing if the value exceeds the annual exclusion ($18,000 for 2024 and $19,000 for 2025), though no immediate tax is due if under your lifetime exemption. In California, this transfer could also trigger property tax reassessment, increasing the tax bill. Additionally, your brother would inherit your cost basis for the gifted portion, potentially leading to higher capital gains taxes if he sells later.

Alternatively, your brother could buy your share, which would result in capital gains tax for you on the difference between your share's original cost and its current value. For long-term planning, consider transferring the property into a trust to manage tax and legal complexities.This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Katie Balatbat · Answer

@Kin Lay

There could be gift tax, income tax, and property tax implications to a proposed transfer.  It depends on how the transaction is structured, and the history of the title and timing.  If you need any recommendations for estate attorneys or CPAs in San Diego, feel free to send me a message.

*This post does not create an attorney-client or CPA-client relationship.  The information contained in this post is not to be relied upon.  Readers are advised to seek professional advice.

How to transfer my share of the house to my brother?

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