Adding a family member to your deed: gift tax and risks

Many families think about putting a son, a daughter or another relative on the home’s deed. Sometimes it is so the home “stays in the family” if something happens, and sometimes it is to help someone have something of their own. It looks like simple paperwork, but it changes who owns the home, can count as a gift to the IRS and can affect your mortgage, Medicaid and your family’s taxes. This guide explains what the rules say so you can think it through before you sign; it does not decide your case.¹

The 2026 gift tax annual exclusion per person who receives a gift

$19,000¹

Generally, the Form 709 deadline in the year after the gift

April 15²

How far back Medicaid looks at transfers for less than their value

60 months⁴

Adding someone is generally a gift

To the IRS, a gift is any transfer to a person where you do not receive full value in money or its equivalent in return.¹ If you put your son on the deed and he does not pay you for his share, you are generally giving him that share.

Some things generally are not taxable gifts: gifts no larger than the annual exclusion, tuition or medical expenses you pay directly for someone, and gifts to your spouse.¹

A case that surprises people. The Form 709 instructions say that if you buy property with your own money and title it in your name and another person’s as joint tenants with right of survivorshipjoint tenancy with right of survivorshipJoint tenancy with right of survivorship is a way for two or more people to own property, each with an equal, undivided interest in the whole. When one owner dies, that share passes to the surviving owners, not to the owner's heirs; that is the main difference from a tenancy in common. Generally the deed has to say so; if it does not, the ownership is presumed to be a tenancy in common. That is the case, for example, in Arizona and Florida, where the law requires the deed to state the right of survivorship expressly.See the full definitionClose, and either of you can sever your share, you have given that person half the value.² The guide How to hold title with family explains the ways several people can own a home.

The annual exclusion and Form 709

The annual exclusion. It counts per person who receives a gift. For 2026 gifts it is $19,000 per person. If you and your spouse give something you own together, each of you uses your exclusion: $38,000 per person receiving it.¹

When Form 709 is filed. If you are a citizen or resident, you must file Form 709 even if you owe no tax, in cases including when your gifts to someone other than your spouse exceed the annual exclusion, or when you give a “future interest” gift, which has no exclusion. A gift is a present interest if the person can use and enjoy the property right away. If spouses give away property they held as joint tenants, each spouse files a return. It is generally filed between January 1 and April 15 of the year after the gift.²

Is there tax to pay? Generally not right away. The donor generally pays the tax, and only after using up the lifetime basic exclusion, which the law raised to $15,000,000 for 2026 gifts.¹¹ But the form is still filed, because it keeps track of how much you have used.

Example with real numbers

A mother who adds her daughter to the deed

An example in words, not a real case, of what the gift looks like.

What she does

Makes her daughter owner of half, without the daughter paying

To the IRS

Generally, a gift of the value of that half

The annual exclusion

$19,000 in 2026; half a home is almost always worth more

Form 709

The mother files it, even though she owes no tax

The tax

Generally she does not pay it, because she uses part of her basic exclusion

The rules come from the IRS.¹² See what your family would net from a sale with the seller net sheet.

Run it with your numbersHow much will I keep when I sell?

Basis: the hidden cost of giving during your life

Basis is the starting point for figuring the gain when property is sold. If you are given property, the general rule is that your basis is the same as the donor’s. The IRS gives an example: stock bought at $10 and sold at $100 owes tax on a $90 gain.¹

A home works the same way. If you bought your home many years ago and give it to your son during your life, he takes your old basis. If he sells it someday, he may owe tax on a large gain. The IRS notes that the rules are different for inherited property.¹ The guide Wills, transfer-on-death deeds and inheriting a home explains how basis works on an inherited home and what a transfer-on-death deedtransfer on death deed (TOD deed)A transfer on death (TOD) deed is a deed in which an owner names one or more people to receive the home when the owner dies. It is not a will. While the owner is alive, they remain the owner: they can sell or mortgage the home and can revoke the deed. To be valid, it must be recorded with the county before the owner's death, and the beneficiary does not have to sign or be told. The beneficiary takes the home subject to its mortgages and liens. Each state has its own rules and name: Washington calls it a transfer on death deed, and Arizona a beneficiary deed.See the full definitionClose is, an option some states offer.

Giving now or leaving it as an inheritance

Gift during your life

Adding a relative today

• The person owns their share right away
• You may need to file Form 709
• They take your tax basis
• It counts in Medicaid's 60-month look-back

Inheritance

Leaving the home at death

• You stay the sole owner while you live
• Basis on an inheritance is figured differently
• Done with a will or other tools your state allows
• Read the guide on wills and TOD deeds

Before you sign, ask how the taxes change on each path.

Your mortgage and the due-on-sale clause

If your mortgage has a due-on-sale clausedue-on-sale clauseA due-on-sale clause is a part of the mortgage contract that lets the lender demand the full balance if you sell or transfer the home, or part of it, without its written consent. A federal law, the Garn-St Germain Act, allows these clauses, but for homes with fewer than five units it bars using them for certain transfers: for example, to a relative on the borrower's death, when the borrower's spouse or children become owners, in a divorce, on the death of a joint tenant, or into the borrower's living trust.See the full definitionClose, the lender can demand the whole balance if you transfer the home without its permission. But the federal Garn-St Germain law says that, on a home with fewer than five units, the lender may not use that clause because of, among others:³

• A transfer in which your spouse or children become owners.
• A transfer to a relative because of your death.
• A transfer on the death of a joint tenant.
• A transfer to your spouse from a divorce or separation.
• A transfer into a living trust in which you remain a beneficiary.

Notice what it leaves out. For transfers during your life, the law’s list names spouses and children, not siblings, nephews or other relatives; the law also lets regulations add other cases.³ If you plan to add someone who is not your spouse or child, ask your servicer first. And if you later want to take someone off the loan, the guide How to remove a co-borrower from a mortgage explains the options.

Medicaid and property tax

Medicaid. If you or your spouse ever need Medicaid for care in a nursing home or other institution, the law looks at assets you gave away for less than their value. For transfers since February 8, 2006, it looks back 60 months, and a gift in that time can leave you a period without coverage for certain services.⁴

The law has exceptions for the home. There is no penalty if you transferred it to your spouse; to a child under 21, or blind or disabled; to a sibling who already had an equity interest and lived there at least one year before; or to a son or daughter who lived there at least two years before and cared for you so you could stay home.⁴ Each state runs its own program; get advice before transferring.

Property tax. A change in ownership can change your property taxproperty taxProperty tax is the tax the county, city, school district and other local bodies charge real property owners every year to pay for schools, police, fire and other public services. It is computed on the value the assessor's office assigns to your home, at each body's rate, minus the exemptions you qualify for, such as the primary-residence exemption in many states. If you have a mortgage you normally pay it month by month inside your payment, through the escrow account. It is generally deductible on your federal return if you itemize.See the full definitionClose or your exemptions, depending on the state. In California, for example, Proposition 19 changed the exclusion for parent-child transfers: the home must be the principal residence of both the giver and the recipient, with a limit of the current taxable value plus $1,000,000 (adjusted every two years), since February 16, 2021.⁵ Ask your county assessor’s office before you sign, and see the homestead exemption guide.

Before you sign a new deed

1. 1. Write down why you want to add this person

   First

   Keeping the home in the family, helping someone or sharing costs: each goal has a different path.

2. 2. Estimate the value of the share you are giving

   Before you decide

   If it exceeds the annual exclusion, Form 709 comes into play.¹

3. 3. Ask your loan servicer

   Before you sign

   The federal exception covers spouses and children, not every relative.³

4. 4. Check Medicaid and property tax

   Before you sign

   Medicaid looks back 60 months; your county may change your assessment or exemptions.⁴

5. 5. Get free guidance

   Before you sign

   A VITA site for taxes and legal aid for the deed.⁶

6. 6. File Form 709 if needed

   January 1 to April 15 of the next year

   Even if you owe no tax.²

If this is you

You want your daughter to inherit the home

Giving it now passes on your basis; an inheritance has other rules. Compare first.¹

You want to add the nephew who lives with you

Garn-St Germain's exception names spouses and children; ask your servicer.³

You married and want to add your husband

Gifts to a spouse generally are not taxable gifts.¹

Your disabled son lives with you

Medicaid does not penalize transferring the home to a blind or disabled child.⁴

You need help with Form 709

Ask at a VITA site; each site decides which returns it prepares.⁶

Costly mistakes

• Mistake: Adding someone to the deed without thinking about the IRS.

  Instead: It is generally a gift; if it exceeds the annual exclusion, Form 709 is required.²

• Mistake: Believing you do not have to report because you owe no tax.

  Instead: Form 709 is filed even when no tax is due.²

• Mistake: Giving the home during your life without figuring the basis.

  Instead: The recipient takes your basis; an inheritance is figured differently.¹

• Mistake: Adding a relative who is not your spouse or child without telling the lender.

  Instead: The federal due-on-sale exception does not name them; ask first.³

• Mistake: Transferring the home shortly before applying for Medicaid.

  Instead: Medicaid looks back 60 months, with limited exceptions for the home.⁴

Where to get free help

For taxes, the IRS VITA and TCE programs prepare basic returns for free for people who qualify; each site decides what it handles, so ask whether it prepares Form 709.⁶ The guide Free tax filing explains how to find one.

For the deed, free legal aidlegal aidLegal aid is the free civil legal help that nonprofit organizations and their lawyers provide to low-income people in civil, not criminal, matters. In housing, that includes representing families facing eviction or foreclosure, alongside matters such as custody, child support, protection from domestic violence and access to benefits. In the United States, the Legal Services Corporation, created by Congress, funds a nationwide network of these organizations; its finder points you to the one in your area. Each sets its own income limits.See the full definitionClose is an option, not a requirement. The Legal Services Corporation funds civil legal aid for people with low incomes; on its site you search for an office by your address, and LawHelp.org has free information and forms.⁷ And protect your deed: the guide on deed theft explains how to guard against fraud.

What to do this week

1. Ask for a copy of your current deed at your county recorder’s office.
2. Find what you paid for the home and for improvements, to know your basis.¹
3. Call your loan servicer and ask how a deed change would affect you.³
4. Ask the assessor’s office whether the change affects your tax or exemptions.⁵
5. Make an appointment at a VITA site or with legal aid before you sign.⁶⁷