Should my mom add us to the title of her house?

Q: My mom wants to add my sis­ter and I as joint ten­ants with her on her home.  How would this affect my sis­ter and I tax wise? Would we be respon­si­ble for prop­erty taxes if my mom doesn’t pay them? Would we have to declare the prop­erty on our fed­eral taxes? Would my mom lose her tax exemptions?

–Lisa, Atlanta, Georgia

A: I’m not a big fan of what your mother is propos­ing.  Though I often see par­ents do this in an attempt to avoid pro­bate or inher­i­tance taxes, it’s gen­er­ally a bad idea. 

Here are a hand­ful of the rea­sons why:

  • Gift Taxes – Adding chil­dren to the deed of a home is essen­tially com­plet­ing a gift to them worth the value of their new inter­est.  For exam­ple, if a house is val­ued at $300,000 and a sin­gle par­ent adds two of their chil­dren on to the deed, they have effec­tively given them a $100,000 gift each.   Gift­ing at this level cre­ates a tax­able gift.
  •  Prop­erty Basis – It’s pos­si­ble that this gift could result in a lower cost basis for the chil­dren than if they inher­ited the prop­erty instead.  The impact of this could be higher cap­i­tal gains tax being owed when the chil­dren later sell the property.
  •  Legal Lia­bil­ity – As a jointly held asset, the prop­erty would likely be exposed to the legal lia­bil­i­ties of any of the indi­vid­ual own­ers.   If any owner has legal action taken against them, their own­er­ship in the house could be included in any judg­ment ren­dered against them.
  •  Inher­i­tance Taxes – If one of the chil­dren should hap­pened to pre­de­cease your mother, she could pos­si­bly have to pay inher­i­tance taxes to return the pro­por­tion­ate share of prop­erty back to her.

 The bot­tom line here is that this just usu­ally isn’t a good idea.  To get alter­na­tives and to learn more about the impli­ca­tions of such a move in your spe­cific sit­u­a­tion, I really think you should engage the ser­vices of an estate plan­ning attor­ney in your area.  Explain to them what your mother is try­ing to accom­plish and see what options they might sug­gest. Sev­eral states have laws that allow ben­e­fi­cia­ries to be added to real prop­erty and depend­ing on where your mom lives, this might be worth exploring.

Thank you for your ques­tion and best of luck to you!


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Examples given are hypothetical illustrations and not an indication of the benefits or features of any USAA product. You should seek policies and advice based upon your own particular circumstances. Sample loans are for illustration purposes only and are not a rate quote, pre-approval, or commitment to lend.

Scott Halliwell and JJ Montanaro are CERTIFIED FINANCIAL PLANNER™ practitioners with USAA Financial Planning Services, one of the USAA family of companies. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and Certified Financial Planner™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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