Tax Ramifications of Quit Claim Deeds

[Jarod Rotolo]

The question is, how would the following scenario impact taxes when filing the tax return the following year?

SCENARIO

Grantor deeds homestead property worth maybe 20k to person A. After some time, person A finds that the property has liens attached to it and decides to deed the property back or to someone else.

Case 1

Person A deeds the property to someone else within weeks of being deeded the property from the grantor.

Case 2

Person A deeds the property to someone else within a few months of being deeded the property from the grantor.

Please explain to me the impacts on someone's tax return for each case. At what point is the time period significant?

Thanks for your time and insights.

[David Dachtera]

@Jarod Rotolo,

@Al Wilson makes a good point. Contact your tax professional.

That said, consider: the property changed hands, but that in itself may not be taxable. Did any MONEY (read: income) change hands? That may be helpful to understand the distinction.

I'm not a financial professional, but my feeling is that value is not taxable until it translates into income in one form or another. Consider that you do not get a tax bill for appreciation until it becomes "realized" in a financial transaction: the sale of the property. (Equity loans are just that: loans. Borrowed money as such is not taxable. If a loan is forgiven that might be considered taxable, depending.)

Again, contact your tax professional.

David J Dachtera

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