Parents want to give home to so he can claim homestead exemption and save on real estate taxes
Tom Olsen: Bess, you're on WDBO. Go ahead.
Bess: Hi, good morning. Thank you so much for taking my call. I would like to ask what is the most economical way for me to give my real estate property? It's a house and lot to my son. He's not married and the reason why I would like to do it is so that he can have a homestead exemption because my husband and I both own a property.
Tom: Bess, this is not the home you live in, this is just an additional piece of property?
Bess: Yes.
Tom: You're telling me that your son lives there?
Bess: Yes.
Tom: Okay, and Bess, what do you think the value of this property is?
Bess: Around 350,000.
Tom: Bess, do you have other children?
Bess: Yes.
Tom: Are you going to try and even things up with them if you're going give him a $300,000 home? What are you going to do for them?
Bess: We already have given them what they need to have. This is the youngest one.
Tom: All right, so Bess, you would simply do a deed, it'd be a deed from you and your husband to your son. The cost of preparing and recording that deed is not going to be great. The reason you're doing this is, number one, you're generous. I appreciate that. Number two, because now he's going to be the owner, he will be allowed to claim homestead exemption on that property, and that will save him on real estate taxes going forward, so that's a good idea.
Then normally there might be some negative capital gains tax ramification of that, but because your son lives there, all in all, I think it's going to be just fine Bess. You're looking for a deed from you and your husband to your son, that deed gets recorded in the public records, then he can claim homestead exemption. If he wants to claim homestead exemption for the year 2023, you just need to make sure that you get that deed done by the end of 2022, Bess. Does that answer your question for you?
Bess: Yes, but I wanted to ask, how much does it issue-- You do this kind of service, right?
Tom: Yes. Bess, I would expect that deed fees and costs of $650.
Bess: Okay, can I just add another-- He is unmarried and you usually advocate the lady bird deed, which I really would like to do, but he does not have anybody. What would be the best way to put a deed with him and one of my children, because accidents happen, is what I'm thinking. Even if he's young, he could have died and then he will have a problem on the house if he doesn't have anybody.
Tom: Bess, what you could do is, rather than put the entire property into his name, what you could do is add his name, so now Bess and Bess' husband and son all own this as joint tenants, rights of survivorship. That form of ownership will allow him to claim full homestead exemption. It means that when you and your husband pass away, your interests would automatically go to him, no probate required. It also means that if he passed away, his interest would come back to you, no probate required. Rather than putting the property solely in his name, simply adding his name as a co-owner of the property as joint tenants rights to survivorship might even be a better solution for you.
Bess: Okay, so in that case, he can claim homestead?
Tom: Yes, because you own it as joint tenants rights for survivorship, he can claim full homestead exemption on it.
Bess: Or him and then it will not affect our home, my husband, and my property.
Tom: Correct, you can continue to get your full homestead exemption as well. Everybody, thanks so much for all your great calls and questions, we do so much appreciate it. My name is Tom Olsen. The name of the show is Olson on Law. You're listening to WDBO.
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