Do you deed transfer to kids?

Question: I would like to add my daughter's name to the deeds of properties that I own. What is the process and the cost involved in doing this and how should it be worded so that she owns the property free and clear once I am deceased? --D.K. Answer: I Bottom line: In most cases, you are doing a disservice to your children if you put them on title with you. Let me explain. Let's say you bought your home years ago for $100,000 and it is now worth $300,000. If you die today, your daughter will inherit the house and take advantage of the "stepped-up" basis. That means that her tax basis is the value on the date of death, in our example $300,000. Ignoring for this discussion inheritance and estate tax issues, if she sells the property immediately for $300,000, she will have made no gain and thus will not have to pay any capital gains tax. On the other hand, if you gift her half of the house, her basis is yours. Now you die and the property is worth $300,000. Her basis is $50,000 from the gift and $150,000 stepped up from your death for a total of $200,000. If she sells now, she has made a gain of $100,000 and will have to pay capital gains tax. To understand this in simple -- nonlegal -- language, the tax basis of the person who gifts property (giftor) becomes the tax basis of the giftee. If you really want your daughter on title, why not sell her half of the property. Then her basis will be what she paid for it. Talk with your financial advisers for your specific situation.