My husband and I are purchasing a home. I have two daughters and one of them is going to be on the deed because she is co-signing with us. She will not be making any payments. Having her on there is just helping us get approved to purchase the home. We would like to put our other daughter on the deed too so that they have equal rights to the home once we are no longer here. How do we go about doing that and what are the tax implications? We are purchasing the home for $450,000 and it is in Houston TX.

ANSWER

The BIDaWIZ Team's Answer:

You can certainly add your other daughter to your home by filing a quitclaim deed. The deed will need to be notarized and filed with your county clerk's office. Please note that by adding your other daughter to the deed, it will be treated as a gift for tax purposes. If the value/share of the gift to your daughter exceeds $28,000 for joint filers in 2013, you will also need to file a gift tax return form 709. There won't be any tax as the lifetime gift tax exemption is $10.5 million for joint filers. However, you need to file this form 709 as it's an informational return required by the IRS. We highly recommend that you don't add your daughter to the deed since it's not tax prudent and they will miss out on the step-up in basis provision. Why exactly is the lender requiring that your daughters be added to the deed? Do they have income that is needed for the mortgage?