Jerry Taylor warns against gifting your home to a child while alive. A house worth $650,000 that cost $150,000 triggers a $500,000 capital gains tax when they sell. Instead, use a revocable living trust to give them a stepped-up basis at your death, erasing the tax.
Do not transfer your assets to your kid's name. This is especially true when it comes to your home. You bought your home years ago when it was $150,000. Now the house is worth $650,000. If you give that home to your child and put their name on the deed, they try to sell it, they're going to have to pay the tax on that capital gain of $500,000. Instead of giving them the home while you're alive, put it in a revocable living trust. That way when you die, they will get your tax basis in that home and owe no capital gains tax. And the home will pass to them outside of Probate court.
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