Legal Question in Real Estate Law in California

Re: quit claim home

For tax purposes, the amount of the gift would be the equity in the property. That amount, if over $12,000, will then be decucted from your lifetime "exemption" from estate tax, which is currently $2million. Technically, if over the $12,000 amount you are supposed to file a gift tax return.

Others have posted information on other issues already in response to your question.

Re: quit claim home

Deeding the property to someone else will not remove you from liability of a loan secured by the property.

Re: quit claim home

(1) Deeding a home is not necessarily a gift - you may be charging full value, for all I know, or the house may have no net value after the grantee assumes a loan. However, if there is any element of gift, yes indeed the gift tax laws will apply. There may be other tax consequences as well, such as reassessment, but I don't know if that has as big an impact in Arizona as it potentially has in California due to Prop. 13.

(2) State laws differ with respect as to whether and when a lender can pursue the borrower on a loan secured by residential real property. In California, in some circumstances the lender is limited by law to pursuing the collateral and cannot get a deficiency judgment from the borrower. Since Arizona's laws, which would apply, probably differ from California's, and I do not practice Arizona law, I will not attempt to outline the details of California law.

Finally, every state has laws, usually in the form of a version of the Uniform Fraudulent Transfer Act, declaring illegal any transfer of property that is done with intent to, or has the effect of, "hindering, delaying or defrauding" existing and potential creditors of the transferor. The laws allow the transfer to be un-done and subjects both participants (transferor and transferee) to liability to the creditor(s). The law doesn't apply to property transferred for reasonable value, but it does apply to situations, for example, where a father transfers property to his children because he is about to lose a big lawsuit and might lose his house. We also see fraudulent transfers a lot in situations involving Medicaid reimbursement liability, the IRS pursuing a tax evader, etc.