Q&A: Transferring ownership of property without mortgage is straightforward

No tricks to transfer of condo ownership

Q: My son lives in a condo I have owned (no mortgage) for many years. He has been paying all cost. I'd like to transfer ownership in the simplest and least costly way possible, but I am concerned about tax consequences. Can we complete the transaction without having to pay for an attorney's assistance?

A: Transferring ownership, particularly of property that is not mortgaged, is straightforward. A lawyer won't charge much for the simple paperwork. Doing it right in the first place can head off future problems.

You may have to file a gift tax return, but unless the condo is worth much more than a million dollars, there shouldn't be any actual tax to pay. Your attorney can explain the way gift and estate taxes are related.

Another reminder to put it in writing

Q: I have a lease with the option to buy. I paid $3,500 for the past nine months with $1,000 to be used as the down payment. It was understood that if I didn't buy, I would get that money back. Now that I am not able to purchase, the owner is not willing to give me the money owed. What is my recourse?

A: I hope that "understanding" was in written form. At any rate, small claims court is an inexpensive way to get a judge's opinion.

Taxes likely due in acquiring mom's home

Q: Are we required to pay 28 percent capital gains taxes on a house we are selling? The house was signed over to my wife and me in 2004 from my mother who is in a nursing home.

A: I'm assuming you don't live in the house. But did your mother retain life tenancy? Has the place been rented out since 2004? Did ownership change when your father died? All that might make a difference.

My guess is that you will indeed owe capital gains tax on your profit — at less than 28 percent, by the way. That profit will be figured from your mother's cost basis for the house. You could use help from a CPA, enrolled agent or tax attorney.

Simplicity of this sale depends on mortgage

Q: We want to sell our previous residence to our daughter who is currently living in it. We need to know the steps.

A: How is your daughter going to pay for the property? If you have an FHA or VA mortgage and she can qualify financially, she could take it over. Otherwise, your loan, if you have one, must be paid off. The lender who finds out there's been a change of ownership (through her insurance policy if nowhere else) could declare your loan all due and payable immediately.

If you have no mortgage, it gets easier. Unless she's paying you all cash, or you're making her a gift or taking back a mortgage, she'll need her own loan.

Then you'll need a lawyer or a real estate broker to draw up a sales agreement. You might want to hire a broker to guide you through the rest of the procedure. Or you can contact whoever usually handles closings in your area. Depending on local custom, that might mean a real estate attorney, title company or escrow company.

Edith Lank responds to real estate questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope). She also can be reached at ehlank@aol.com.

Q&A: Transferring ownership of property without mortgage is straightforward 11/20/09 [Last modified: Monday, February 15, 2010 8:30am]

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