The Elrod Firm


Why Not Deed The House To The Kids?

Justin, my wife and I want to make sure our home goes to our children when we die. I want to deed it to them now because that seems to be the cheapest option. I also figure that will keep the home safe if one of us ever needs a nursing home. My wife is hesitant. Is there any reason we shouldn’t go ahead with a deed now? – James

James, Your desire to protect your home and keep things simple for your children is understandable, but I’m with your wife on this one. Aside from the obvious (I always prefer that my clients keep control of their assets for as long as possible), there are some important tax issues you should consider before deeding away real estate while you’re living.

Most importantly, deeding your home to your children now could result in surprise capital gains taxes when the home is sold. If you sell your own home while you are living, you will probably be exempt from capital gains taxes. But if you deed your home to your children and the home is sold either before or after you die, they will have to pay capital gains taxes on the profits based on your original purchase price.

Planning to pass real estate, including your home, to your children when you die can erase or significantly decrease capital gains taxes. When real estate is inherited instead of passing through a lifetime gift, the basis for calculating capital gains taxes is reset as of the date of death, which usually results in significant tax savings.

Chapter five of Justin Elrod’s book, You Need A Plan, clarifies this issue and explores other potential tax concerns that come with deeding your home to your children. Order your free copy of the book at And don’t forget, you can always call my office for a no-charge strategy session on estate and long-term care planning issues like these.

Are you in a similar situation?

We can help you navigate your unique circumstance.

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