Jerry Taylor explains why transferring your home to your child while alive costs them in taxes. A house bought for $150,000 now worth $650,000 would saddle them with a $500,000 capital gains bill. A revocable living trust passes it to them tax-free at your death instead.
Do not transfer your assets to your kid's name. This is especially true when it comes to your home. Say 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, when 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. Jump on my newsletter in my link.
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