How to Give A House To My Wife

[Mangas Coloradas]

Hi all, I'm a long term lurker ... but this is first posting. For a variety of reasons I would like to give over the deed of the house we live in half the year to my second wife. The other half the year, we are travelers/rvers with official residency in the no tax state of South Dakota. We own no other houses. The house is currently in my name only. I have children from my first marriage that will be provided for in my estate but I want my current wife to just own the house outright. This house is located in Santa Fe, New Mexico which I'm sure makes a difference in how I do this. I've heard of something called a quitclaim deed which I would file with the County of Santa Fe? Would that be sufficient to carry out my wishes? I'm assuming that since we're husband and wife, I can give her the house without any tax implications? If this is a bad idea, I can just find an attorney I suppose to do the work for me. I would appreciate any thoughts or further ideas from the learned members of this board..

[Vanguard Fan 1367]

In Florida I paid my attorney to help me deal with the forms involved in having my house go from joint ownership to just me and for a rental property to go from joint ownership to her. His fees seemed moderate but I don't remember what they were.

[bsteiner]

Why a quitclaim deed?

If you spend half the year in New Mexico and half the year traveling, might New Mexico claim you're a New Mexico domiciliary?

[Mangas Coloradas]

Why a quitclaim deed?

If you spend half the year in New Mexico and half the year traveling, might New Mexico claim you're a New Mexico domiciliary?

New Mexico states that if you live more than 1/2 the year plus one day in the state, you must pay NM state tax. We make sure that we spend much less time than that in the state. There are many many people domiciled in other states (most notably Californians, Arizonans, and Texans) who own "vacation homes" in Santa Fe. I suppose the Texans are making sure to spend less than 1/2 the year in NM for the same reason. But this is probably beside the point, isn't it?

[bsteiner]

Why a quitclaim deed?

If you spend half the year in New Mexico and half the year traveling, might New Mexico claim you're a New Mexico domiciliary?

New Mexico states that if you live more than 1/2 the year plus one day in the state, you must pay NM state tax. We make sure that we spend much less time than that in the state. There are many many people domiciled in other states (most notably Californians, Arizonans, and Texans) who own "vacation homes" in Santa Fe. I suppose the Texans are making sure to spend less than 1/2 the year in NM for the same reason. But this is probably beside the point, isn't it?

As in many states, you would be taxable as a New Mexico resident for income tax if you're domiciled in New Mexico, or if you spend more than a specified number of days in New Mexico. The number of days is objective, but domicile turns on all of the facts and circumstances.

[Katietsu]

There could be a disadvantage from an income tax perspective. If your wife inherits the home, she receives a stepped up basis. If she is gifted the home, she receives your basis. If the home is sold after your death, this could be a big difference in capital gains.

If you gift it and she would use it as her principal residence for a couple of years prior to selling it, she could avoid capital gains tax under current law.

I have heard of people using irrevocable trusts and/or life estates to take the property out of the will while maintaining the stepped up basis.

[mptfan]

Is there a mortgage?

[Mangas Coloradas]

We just paid off the mortgage which is what why I'm thinking of doing this now ... She contributed substantially to the mortgage payoff which is another reason to give her the house free of clear of my estate.

[jryan]

Greetings, we are glad you joined!

Not a recommendation, but New Mexico has Transfer on Death Deeds.

I realize that this method of transferring ownership many not meet your needs, but wanted to let you know that it appears to be an option.

There will probably be trade-offs (immediate ownership interest vs. stepped up basis, ...) with the methods that are available to achieve your goals so please discuss various options with your wife and then with your attorney and tax advisor.

[Mangas Coloradas]

Greetings, we are glad you joined!

Not a recommendation, but New Mexico has Transfer on Death Deeds.

I realize that this method of transferring ownership many not meet your needs, but wanted to let you know that it appears to be an option.

There will probably be trade-offs (immediate ownership interest vs. stepped up basis, ...) with the methods that are available to achieve your goals so please discuss various options with your wife and then with your attorney and tax advisor.

Much obliged jryan and all the other posters ... I appreciate your thoughts. My son has power of attorney (it would be delicate to say the least to remove him from that responsibility) and so I would hate for my wife to be dependent upon his good will to stay in the house if I should become incapacitated or otherwise unable to speak for myself.

[Dottie57]

I have heard of a quit claim used when two people are divorcing. 2 people on the deed, one files a quit claim so that the ther owns the home in total. I am not sure a quit claim would work if there is no one else on the deed.

Spend the money on an attorney and find the correct information.

[Gnirk]

My husband built his home the year before we were married, so it was in his name only. After 15 years of marriage, he used a quit claim deed to transfer from his name to our names as joint tenancy with the right of survivorship. We then recorded it with the county, and the house is titled in both of our names as joint tenancy with the right of survivorship. No mortgage involved. It cost $60 to record the deed with the county.

You can likely do the same, deeding the house from your name to her name. But what if she passes away before you?

[jfn111]

A quit claim deed should work just fine for what you want to do.

[SuzBanyan]

And if your wife dies before you, would you want any right to continue to live in the house? If so, a quitclaim of your entire interest in the house to her might not be the right solution.

[BillyK]

You definitely want to speak with an attorney. People often use quitclaim deeds when there are better choices such as a bargain and sale deed or even better various warranty deeds. States such as Texas, title companies don't like quitclaim deeds. They are often used for clearing minor clouds on title. Then since you want it to be your separate property, you want to make sure the granting clause in the deed is styled in such a manner that it is quite clear you are conveying it to your wife as her separate property.

You want to discuss with the attorney the fact that it is not your homestead and that you have clearly established that your domicile is located elsewhere, particular when traveling in an RV. The same too down the road, if you were to move into full time as your main domicile, it could very well become your property too regardless of the deed. I have seen through the years many instances in state other than New Mexico where a person will deed the property to their spouse due to various reason only to find out when the property is sold that the title company will require the joinder of the spouse on the deed. In Texas for example, title companies don't recognize a deed between spouses on a homesteaded property unless there is a divorce decree and they will name the spouse on the title commitment as an owner or record regardless of the deed of record to their spouse. A title company will want to have a marital history affidavit from the seller and then it will need to be proven to them whether it really is separate property which can become more complicated when the spouse that deeded their interest out is deceased.

As many times as I have seen married copies complicate title by trying to convey their interest out in real estate to a spouse, I would never do it personally without first fully discussing it with a good real estate attorney.