How does a QUIT CLAIM DEED work? Does the owner have to pay the same taxes as they would in an actual sale?

Question

What if there is no money involved?

Example : If a relative wanted to use a quit claim deed to gift a piece of property to a family member, would they have to pay gift taxes?

Answer 1

I didn't knew you had to pay taxes on quiet clams.

Answer 2

The type of deed has no influence on gift tax liability.  

I think one easy way to understand this problem is this:  If it were possible to circumvent the gift tax by means of a quit claim deed, then (1) everyone would know this fact; and (2) everyone would do it routinely.  And of course, if it were that easy to avoid gift taxes on transfers of property, Congress would have closed the loophole long ago.

Answer 3

Even if there is no money involved (the property has monetary value) the grantor may still owe gift tax. Whoever receives the property will not owe taxes other than the normal property taxes when they come due.

Quit Claim can also be challenged in court, it's much better to get a Warranty Deed. Funny, I just came from the lawyer's office and the court house regarding a deed, lol. Without the specifics I couldn't tell you what's best but the best thing to do is talk to a tax attorney.

Also, there is a way around gift tax. If you draw up a loan and forgive amounts up to the yearly gift amount, which I think is $12,000 now and $24,000 for married couples. And just in case to avoid problems at death if it's premature just put in the literature to forgive the loan at death.

So you or whoever would be a lienholder but would forgive the loan on a yearly basis until the gift is completed.