Quit Claim deed to remove a person and add parent, tax issues?

[gideon]

My "Stepfather" was married to my mother traditionally not legally, so legally he was only a close friend. When he refinanced the home, he had me sign the deed with him as Joint Tenant With Right of Survivorship, but he took on the loan alone. He didn't want us to lose the home in the event he should pass away. Unfortunately, he recently passed away and the mortgage is still there under his name. I did a quit claim deed to remove his name from the deed and in writing the new deed I had my mother added onto the deed. My mother is paying for the mortgage and we both know that since the mortgage is under my "stepfather's" name my mother can not claim the taxes. We are fine with that since it will only be about 4 more years to pay off the loan.

The question is, by adding my mother onto the deed by quit claim deed, do I need to file a gift tax. I called the IRS and they stated that the transfer I did by quit claim deed does not require a gift tax to be filed. However, they suggested I file one to protect my mother's interest in the property since there is a mortgage still out there.

If I file a gift tax, how do I calculate my basis on the property. I don't know how much he bought the property for but I can look up the current FMV on the county website. Or do I have no basis since I didn't pay anything for it and technically the bank still owns it until the mortgage is paid off?

Any information would be greatly appreciated. Thanks!

[ricki]

With all due respect, your stepfather, you, and now your mom have really mucked things up. There were far better ways to do what you were trying to do. Too late now.

See a real estate lawyer and an accountant. I'm neither, so I can't give you either accounting or legal advice. However, SOMEONE is entitled to deduct the taxes and interest from his/her tax return. And I'd suspect that it's your mother, since she's the owner of the property,

You can't do a quit claim deed to remove someone else (your stepfather) from the deed. A quit claim deed says, basically, "I relinquish whatever ownership I have in this property." You can't speak for your deceased stepfather. There may even be some serious negative consequences if you filed, representing somehow that you were your stepfather.

You did have the power to add your mother to the deed . . . if you did it properly.

I don't follow the IRS's advice. What are you protecting if you file a gift tax? You have the right to give a portion of whatever you own to your mother. That's not the issue. Further, there's no connection between the mortgage and the deed. The mortgage is in your deceased stepfather's name. The ownership is held by you and perhaps your mother.

On top of all that, your county does NOT show the FMV on its website. It shows the assessed value which--I promise you--is NOT the FMV.

And you certainly do have a basis value. The bank doesn't own it. You do. Read the deed. The bank has a right to foreclose and to claim your property if you fail to make payments.

Look: This is a complete clusterf___. You need both a lawyer and an accountant to straighten this out. Go to the lawyer first.

Hope that helps.

[link]

Your basis in the property is half the price when it was purchased plus half the value when your stepfather died. Half of that would be the amount of the gift.

Before you file the deed, if you haven't already, get advice from a local live professional.