Author Topic: Adding Wife to Deed of House - Tax Implications?  (Read 3430 times)

BrickByBrick

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Adding Wife to Deed of House - Tax Implications?
« on: January 15, 2018, 05:21:31 AM »
Hello all, I'm trying to determine the potential tax (or other) consequences of filing a quit claim deed in my state (Virginia) to add my wife to the deed/ownership of the home.  I've checked with my mortgage company to verify that adding my wife would not trigger a "due on sale" situation (it won't).

What I'm not sure about is whether adding her would potentially trigger any tax issues if we were to then sell the house within the next two years after adding her (which might happen).  I've owned the home for more than two years, but would adding her reset the clock on any tax issues?  This is probably a mute point, as the increase in value over the past few years won't even be close to the $250K threshold for an individual regarding capital gains (the house has experienced about a $25K gain since I purchased it), but it just has me thinking of what consequences I might not be thinking/aware of...

The reason for all this is to just make sure she is easily able to have full legal rights to the house in the event I passed away.  I just don't want a quit claim deed to bite me with unknown consequences.  We will be making wills soon so I could also just stipulate that she gets the house in the will, but I suspect a quit claim deed would resolve the house question faster than going through any sort of probate (if I were to die).

I might be making a mountain out of a molehill, but that's why I am asking the question here!  Would a quit claim deed be a good idea or is clarifying survivorship in the will less messy?


Engineer_Erik

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Re: Adding Wife to Deed of House - Tax Implications?
« Reply #1 on: January 15, 2018, 11:27:29 PM »
What's your estate planning looking like?  What about just putting the house in a trust, and making you and your wife trustees?   If you ever plan on doing a trust later, might as well put the deed in the trust now.

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EricEng

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Re: Adding Wife to Deed of House - Tax Implications?
« Reply #2 on: January 16, 2018, 07:08:20 AM »
If it's in the will, it will have to go through probate and could take a while (3-6 months).  If she is on the deed, then she just has it right away without issue.  Virginia has special tax code that allows you to transfer half to your spouse with no tax bill.  Any real estate lawyer can perform this for you for a reasonable fee.

A couple things to beware of such as if you divorce is she will likely now have a claim on half the house where if you had kept it "separate" and paid the mortgage with "separate" money (money not earned while married for instance) you would likely keep it all.  Also, if she gets hit with a lawsuit or lien (think car wreck where she hurts people) they can come after your house easily if she is on the deed, but not if she isn't on the title.  You are just doubling your exposure to litigation by adding her.
Just for reference: http://statelaws.findlaw.com/virginia-law/virginia-marital-property-laws.html

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« Last Edit: January 16, 2018, 07:15:11 AM by EricEng »