Q: Can I convey sole ownership of a home to my son at no value in NC, and what is involved?
Will he still need to pay sales tax on the value? What other fees or expenses may be involved? Can this be accomplished with only a closing attorney, or can this be done through the county offices?
A: It is always a good idea to have a real estate attorney prepare deeds to transfer land. You will obviously have to pay the attorney to do this, but it is well worth the security of knowing it was done correctly. Once your attorney prepares the deed, it will have to be filed at the Register of Deeds in the county where the property is located (which requires you to pay a small fee).
You can convey your home to your son without worrying about sales tax. However, giving your house to your son for no consideration/value is a gift. This means that you should file a gift tax return with the federal government after you transfer the house.
Filing a gift tax return does NOT mean that you automatically have to pay gift tax. Each person has a $5.43 million exemption that they can use either during life to make gifts to people, or at death by transferring assets through their estate. Until you make gifts (either during life or at death) that amount to $5.43 million, you do not have to pay any estate or gift tax. So, the value of your house would be deducted from your $5.43 million exemption. However, unless you plan to make significant lifetime gifts or expect to leave an estate worth more than $5 million, this should not cause you to incur any actual taxes. It will just subtract from your significant exemption.
Also, you should be careful if you are attempting to convey your home for a particular reason. Sometimes, people give away assets in an attempt to qualify for need-based programs such as Medicaid or for other purposes. This can result in issues such as disqualification from governmental programs. If you are hoping to achieve a particular goal by conveying your house to your son, you should talk to an attorney to make sure it won’t cause any unintended consequences.
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