My parents own a commercial building. It is currently in my father's name. He wants me to have the building. If I wait to take ownership after death, it would have to go through probate, which neither of us want. I am struggling with the best thing to do, and am trying to weigh the pros and cons.

Q - To transfer the property, that would be a quick claim deed - how do we do that?

Q - If the property is transferred within the family (from father to daughter); will the property taxes be subject to raise, due to transfer in ownership (like a sale)?

Q - My income is higher than my father's (he is retired and on SS alone), if we chose to sell the building, would it be better to do while in his name, so it would not be subject to as much capital gains tax? (I think yes.)

Your father can "quit claim" the property to you. Basically, you can find standard "quit claim deeds" on the internet. Try to find one that is appropriate to your state. After filling out the quit claim deed, go to the courthouse and file it--it's pretty much as simple as that. Keep in mind, that your father, after having quit claimed his interest, does not get released from any financial responsibility he has on the property. Hopefully, the property is free and clear; if not, he will still be obligated towards any loans or mortgages. Quit Claim means exactly what it says, he is "quitting" any claim to the property but not the loan.

Capital Gain Exemptions apply to homestead properties, not commercial properties.

Best regards,

Leatha Manning

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Originally Posted by mshayc

My parents own a commercial building. It is currently in my father's name. He wants me to have the building. If I wait to take ownership after death, it would have to go through probate, which neither of us want. I am struggling with the best thing to do, and am trying to weigh the pros and cons.

Q - To transfer the property, that would be a quick claim deed - how do we do that?

Q - If the property is transferred within the family (from father to daughter); will the property taxes be subject to raise, due to transfer in ownership (like a sale)?

Q - My income is higher than my father's (he is retired and on SS alone), if we chose to sell the building, would it be better to do while in his name, so it would not be subject to as much capital gains tax? (I think yes.)

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I would not recommend transferring the property by quit claim deed. A quit claim deed is commonly used for clearing up title issues or transferring homes between divorcing parties. Since this property is a commercial property, with the possibility of financing or sale in the future, you would be far better off transferring with a bargain and sale or warranty deed. The eventual lender or purchaser's title company is not going to want to see a quit claim deed in the chain of title.

I would also not recommend preparing the deed yourself. You can have it handled by a real estate attorney or title company inexpensively and you'll know that it was done properly. If you do it yourself and make a mistake it can be very costly to fix.

Depending on your location the property may be subject to a reassessment after the recording of a deed, so it is possible that there will be an increase in property taxes. Some towns reassess after transfers and some don't. You can call the tax assessor's office and ask them if there is a reassessment after they are notified that a transfer has taken place.

As for taxes, there will definitely be significant tax implications for you if you proceed with the transfer the way you've planned.

Please speak to an accountant before following through. I think you would be far better off by creating an LLC with you and your father as the only members. The property would be transferred to the LLC now and you will be the sole member after your father passes away without any need for probate. You will have no personal liability if anything happens at the property and your tax situation should be far better than if you had taken individual ownership of the property.