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Parents who were co-signers may be removed later from title to child's home


Q: When I purchased my house in 1986, I had to use my parents as co-signers to qualify for the loan. Now I am planning to refinance without my parents since I am able to qualify on my own. I have paid all the house payments and tax bills by myself since 1986. I would like to exclude my parents' names from my home title and property tax bill. How can I do this? Will it affect my property tax bill?


A: You can accomplish your goal simply by having your parents execute what it known as a "quit claim" to your home. This document says that they drop any claim they have to the property and leaves you in sole possession of it. These documents are available at title or escrow companies and should be filed with the county recorder's office. Your parents' quit claim to your home will not affect your property taxes because Proposition 13 exempts real estate transfers of up to $1 million between parent and child.

Q: My wife and I are elderly and in ill health. How do I add our daughter's name as an owner of our home? Will it increase our property tax assessment?


A: Your property tax assessment will not change if you add your daughter as a joint tenant owner on the deed to your home. The home's property tax assessment also will not change when your daughter inherits the house at your death if she files the proper forms with the county assessor's office to claim the exemption for residence transfers between parent and child.

To add your daughter to your deed, simply file a new deed with your county recorder's office. Your daughter should use her legal name.

Are you adding your daughter to your deed to allow your estate to bypass probate and go directly to her? If so, your strategy will work. But you should know that parents who add an adult child as a co-owner of their home potentially expose themselves to serious problems. Once a child is listed as a co-owner, your home is attachable should he be sued.

Furthermore, if the child died before his parents, the parents would have to prove to the IRS that the home should not be included in the child's estate since the child did not buy or maintain it.

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