Is a Quit Claim Property Deed Necessary?
A quit claim property deed is a type of deed that is used when transferring the ownership of real estate from one owner to another. Using a quit claim deed tends to be the fastest and easiest type of deed to use to make the transfer of ownership. The primary use of this type of deed is when the ownership of the property transfers within a family. For example, in a divorce when one of the spouses is keeping the home, the other spouse quitclaims ownership rights to the spouse. Parent to child transfers is another situation where this type of deed is commonly used.
Quitclaim Property as a Gift
It is common for the transfer of ownership using a quit claim deed to occur without money changing hands. The Internal Revenue Service (IRS) does allow the gifting of property from one party to another using a quit claim deed and without federal tax consequences. To avoid paying federal taxes on the property, however, the gift amount of the property has to meet the IRS guidelines for annual gift exclusion. The amount of the gift allowed can change on an annual basis, but if the property falls within the gift amount guidelines or if a spouse gifts the property to a spouse using a quit claim deed, then it is a non-taxable event.
If two parents want to gift their jointly-owned property to a child using a quit claim deed, this doubles the gift value amount permitted. For example, in 2009, the gift amount allowed was $13,000. Parents quit claim deeding a home to a child can gift $26,000 worth of a home without having to pay federal taxes. If the value of the home exceeds this amount, then the parents are responsible for paying a gift tax on the difference.
Receiving the Property
When the new owner granted by the quit claim deed receives the property, the new deed must be filed with the county where the property is located. Typically, this is handled by the County Clerk’s Office, which charges recording fees for filing the quit claim deed. The new owner of the home is responsible for paying these recording fees. Ownership of the property and the responsibility for paying the property taxes on the property becomes that of the new owner of the home.
Options for Obtaining a Quit Claim Property Deed
To obtain a quit claim property deed, you have a couple of options. Your first option is to hire a real estate attorney to draw up the deed for you. The attorney creates the paperwork, has each party sign it, notarizes the document and then files it with the county. A less expensive option is to hire a paralegal to do the same things for you. Most counties also make a quit claim property deed form available online. You can download a free quit claim deed form, complete it and file it with the county on your own. This is the least expensive way to get a quit claim deed because the only cost is to file the deed with the county.
WiseGeek.com: What is a Quitclaim Deed?
IRS.gov: Gift Tax
Herald.net: Quitclaim Deeds Can Have Excise Tax Implications