If you have recently married and already own a home or other real estate, you may want to add your new spouse to the deed so the two of you own it together.To add a spouse to a deed, all you have to do is fill out and sign a new deed.If you don't prepare in advance, this action can have a devastating financial outcome.Adding your spouse to your deed may be able to achieve the result you want.
Step 1: Take the time to read your mortgage.
There is a "due on sale" clause on your mortgage.If you sell or transfer part of your ownership, your lender has the right to demand full payment on your mortgage.If you don't pay your mortgage, your property can be seized by the bank.The bank has less security if you sell or transfer some of your property.There are exceptions to the "due on sale" clause.The Garn St. Germain Act protects due-on-sale prohibitions.Nine cases in which a lender may not invoke the "due on sale" clause are exempt.Exemption six is a transfer in which the spouse or children of the borrowers own the property.If your mortgage has a due-on-sale clause, you should notify your lender in writing of your intent to add your spouse to the deed.
Step 2: You will lose control of your property.
You could do anything you wanted with the property if your name was on the deed.If you add your spouse, he has the same interest in the property as you do, and you can't sell it, make improvements, or change it without his consent.Adding your spouse's name to the deed will expose your property to judgments against him.If he has a bad debt, his creditor can force the sale of your property to pay it off.Before adding his name to your deed, you should know his financial history.Changing the deed so that you and your spouse both own the property, instead of just you, changes the situation in the eyes of banks, lenders, and the government.Adding his name to your deed may make you ineligible for certain government benefits, such as Medicaid, depending on your spouse's financial status and earnings history.
Step 3: To avoid probate, you need to learn the words.
Adding your spouse's name to your deed is one of the most common reasons to do this.There is a more efficient way to accomplish the same goal.Adding another owner makes the process more difficult.If you retain interest in the home, it will still go through the court system.You must specify in the deed that you are claiming as joint tenants with a right of survivorship if you want to avoid probate.Tenants in the entirety is a specific deed-holding status in some states.It only applies to married couples.If you live in a community property state, you can specify the home or land is yours.Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.Property is usually claimed as tenants by married couples.There are ways to claim property in your county recorder's office.Make sure you pick the one that works best for you.You have to choose an ownership relationship that has a right of survivorship.Your spouse will take over your ownership share of the property when you die.
Step 4: You may lose tax exemptions.
Adding your spouse to your deed could mean you no longer qualify for a homestead exemption.This could cause your tax bill to go up.If you add your spouse to your deed, you may lose your property tax exemption.
Step 5: Pay gift tax.
You are giving your spouse a gift when you add her to your deed.Taxpayers can give up to $14,000 per year.Adding your spouse to your deed could cause gift tax reporting obligations if your property is worth more than that.Gifts to US citizens are exempt from state and federal gift taxes.
Step 6: Discuss capital gains with your spouse.
Capital gains are taxes on the profit you make from selling property.If you buy a house for $100,000, that amount becomes your basis in the property.You would have a $100,000 capital gain if you sold the house for $200,000 five years later.If he sells the property later, he will have to use your basis if you add your spouse to your deed.If he acquired the property when you died, he could pay more in capital gains taxes.If you added your spouse to the deed for the house you bought for $100,000, it would be the same example.Five years after your death, your spouse decides to sell the house for $1 million.His capital gain is $900,000.His capital gains basis would be the fair market value of the house when he acquired it, if you transferred the property to your spouse at your death.It could result in lower capital gains taxes.If you return to the $100,000, you can create a TOD deed for your spouse.Your spouse acquires a house with a fair market value of $900,000 when you die.He only owes capital gains taxes when he sells it for $1 million.It is important that both of you understand how adding your spouse to your deed could affect your tax liability so you can make an informed decision.
Step 7: Obtain a quitclaim form from the recorder's office in the county where the property is located.
If you have any interest in a property, a quitclaim deed can transfer that interest to another person.When changing a name on a deed, or adding another name to it, these deeds are often used because they are simple, inexpensive and don't require the property owner to hire an attorney.The form will include a blank for your name, the names of people to whom you want to transfer the property, and a legal description of it.You would like to make your spouse and yourself joint owners of the property.You can specify how the two of you will own the property here.
Step 8: The deed should be signed by a notarial person.
The deed is not a legal transfer without a seal.Additional witnesses are also required in some counties.Your spouse must also sign the deed in some areas.You can ask at the recorder's office if the deed includes blanks for both of you to sign.You may need a spousal affidavit if you claim the property in a different way.The affidavit states that the two of you are married and must sign it under oath.The methods of claiming property are only available to married couples, so if you want to claim the property as tenants by the entirety or as community property, you need a spousal affidavit.
Step 9: The deed should be recorded.
Once it is completed and signed, your county recorder's office has to record it in order for it to be included in the official property record of the county.There will be a fee for this.As a result of the change in ownership, you will have to pay property taxes.