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What Are the Tax Consequences of Adding a Domestic Partner to a Deed?

What Are the Tax Consequences of Adding a Domestic Partner to a Deed?

Full question:

I am adding the name of my domestic partner to my property deed in pennsylvania. The home is worth about 250K. What are the tax implications?

Category: Taxes
Date: 04/07/2025
State: Pennsylvania

Answer:

The answer will depend on whether the transfer is a gift and if not, how much is being paid for the property interest. If it is a gift, it is possible gift taxes may be owed, depending on the total value of gifts made during the year. We suggest you consult a tax professional who can review all the facts and documents involved. Pennsylvania realty transfer tax is imposed at a rate of 1 percent on the value of real estate (including contracted-for improvements to property) transferred by deed, instrument, long-term lease or other writing. Both grantor and grantee are held jointly and severally liable for payment of the tax.

Pennsylvania realty transfer tax is collected, often along with an additional local realty transfer tax, by county Recorders of Deeds. The Recorders of Deeds remit the commonwealth's 1 percent to the Department of Revenue, and the locals have the option to share their realty transfer tax among school districts and municipalities.

Some real estate transfers are exempt from realty transfer tax, including certain transfers among family members, to governmental units, between religious organizations, to shareholders or partners and to or from nonprofit industrial development agencies. Deeds to burial sites, certain transfers of ownership in real estate companies and farms and property passed by testate or intestate succession are also exempt from the tax.

FAQs

How much is the state deed transfer tax in Pennsylvania?

In Pennsylvania, the state deed transfer tax is one percent of the property's value. This tax is applicable when property is transferred by deed. Both the person transferring the property (grantor) and the person receiving it (grantee) are responsible for this tax. Additionally, some local jurisdictions may impose their own transfer taxes, which can increase the total amount owed.

How much does it cost to add a spouse to a house deed?

The cost to add a spouse to a house deed typically includes the realty transfer tax, which is one percent of the property's value in Pennsylvania. For a home valued at $250,000, this would amount to $2,500. Additionally, there may be recording fees charged by the county Recorder of Deeds. It's advisable to consult with a legal professional for a complete understanding of potential costs.

What are the disadvantages of adding someone to a deed?

Adding someone to a deed can have several disadvantages. It may complicate ownership rights, especially if the relationship deteriorates. Additionally, the new co-owner may have the right to sell or mortgage the property without your consent. There may also be tax implications, such as gift taxes if the transfer is considered a gift. Consulting with a legal professional is recommended to understand the full impact.

What does adding someone to a house deed do?

Adding someone to a house deed transfers a share of ownership of the property to that person. This means they have legal rights to the property, including the ability to live in it, sell it, or mortgage it. It can also affect how the property is handled in the event of a divorce or death, as both parties will have ownership rights.

What happens if you add someone to your house deed?

When you add someone to your house deed, that person becomes a co-owner of the property. This change can affect your rights to the property, as both owners will have equal rights to make decisions regarding it. Additionally, this transfer may trigger tax implications, such as realty transfer taxes or potential gift taxes, depending on the circumstances of the transfer.

What are the disadvantages of adding a name to a deed?

Adding a name to a deed can lead to several disadvantages. It may create joint ownership, meaning both parties must agree on decisions regarding the property. If the relationship changes, it can complicate matters like selling or transferring ownership. Additionally, there may be tax implications, such as gift taxes if the transfer is viewed as a gift. Legal advice is recommended to navigate these issues.