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Published on: 06/16/2023 • 5 min read

Transferring Ownership of a Property From Parent to Child in Texas

Transferring ownership of property from a parent to a child in Texas is a fairly straightforward process, but it does require some careful planning.

Before officially signing over the deed, it is important to understand the potential tax implications and legal requirements before transferring property. In most cases, parents who are interested in transferring ownership of real estate to their children must initiate the transfer through deed documents that must be legally prepared and recorded.

Here is what you should know about house title transfer in Texas.

How do I gift my house to my child in Texas?

When transferring property in Texas to your child, the process you use will depend on whether you’re wanting to gift it to them while you’re living or pass it on to them upon your death.

Gifting property to your children

If you are gifting the house to your child while still living, the process is fairly straightforward. You, as the existing owner, must sign and record a deed with the county clerk’s office. The deed should include detailed information about the property, including its address, legal description, and a full list of any liens or mortgages that are attached to it. Your child, the new owner, will be responsible for paying any taxes related to the transfer.

Transferring ownership of a property after death

If you are planning to transfer the deed of the house after your death in Texas, you will need to include the details of the transfer in your last will and testament. Upon your death, a court-appointed executor or administrator will transfer the deed to your child in accordance with the will. This process can be complex and typically requires counsel from your legal team and an estate planning wealth management firm.

There are several types of deeds that may be used to transfer real estate after death, including:

  • Affidavit of Heirship
  • Transfer on Death Deed
  • Transfer on Death Affidavit
  • Small Estate Affidavit

Each of these documents must be properly prepared and recorded with the county clerk’s office in order for the transfer to be legally binding. Additionally, it may also be worth considering the use of a trust when transferring ownership of property from a parent to a child in Texas as a trust can provide further benefits for wealth and property transfer.

Continue reading: How to set up asset protection trust

What are the tax implications of transferring a house in Texas?

Do you have to pay taxes on a gift deed in Texas? Yes, gift taxes can be a factor when transferring ownership of real estate, but only if the property is valued over the federal gift limit. As of 2023, the federal gift tax exemption is $11.7 million per individual, meaning that gifts below this threshold generally will not incur gift taxes. However, Texas does not impose a gift tax on transfers of real estate between family members nor is there a capital gains tax in Texas, so you may only be liable for federal taxes.

When transferring a house after death through a will or trust, estate taxes may come into play. It’s crucial to consult with a tax professional and/or estate planning attorney to fully understand and navigate the potential tax implications of transferring a house in Texas, and ensure compliance with both federal and state tax laws.

How much does it cost to transfer property deeds?

The cost of deed transfer in Texas can vary depending on various factors. Some typical expenses involved in the transfer process include:

  1. Recording fees: When transferring property deeds, you will generally need to file the appropriate documents with the county clerk’s office. Each county sets its own recording fees, which can range from a few dollars to several hundred dollars, depending on the county and the type of document being recorded.
  2. Title insurance: Title insurance is often required in real estate transactions to protect against any potential issues or claims that may arise with the property’s title. The cost of title insurance can vary depending on the property’s value and the insurance company providing the coverage.
  3. Legal/financial advising fees: If you choose to work with an attorney and/or financial advisor to assist you with the transfer of property deeds, there will be fees involved. The exact cost will depend on the complexity of the transaction and any additional services provided.
  4. Transfer taxes: Texas does not have a state-level transfer tax, but some counties may impose a transfer tax or fee. These fees are typically a percentage of the property’s sale price or value.

When planning to transfer your property to your children, it’s essential to consult with a real estate attorney or a title company to get a more accurate estimate of the costs involved in transferring property deeds in the specific county in Texas in which you are transferring property. Be sure to take these numbers back to your financial advisor so that they can compare these costs to your financial plan and help inform your decision making.

Wanting to gift your property to your child? Avidian Wealth Solutions can help you consider your options.

Transferring ownership of property from a parent to a child in Texas may only require signing simple documents, but the planning process can be complex. Whether you’re planning on gifting the property while still living or transferring it after your death, understanding the tax implications, associated costs, and legal requirements is crucial. To make better informed decisions, it’s best to consult with your financial advisor to understand how these factors align with your financial plan.

If you need assistance with gifting your property to your child in Texas, Avidian Wealth Solutions is here to help you explore your options. We offer a Houston family office experience that combines financial services like tax solutions, estate planning, and retirement planning in Houston and Austin, to optimize the financial lives of our clients. Although Houston and Austin are where Avidian has physical offices, we happily serve clients all over Texas.

To learn more about how we can help you incorporate gifting strategies into your financial plan, schedule a conversation with us today.

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