You can gift a house to your son by signing a new deed and recording it with the county, but the paperwork is the easy part. Gifting a house to your son triggers a federal gift tax filing on any value above $19,000, passes your original cost basis to him so he inherits a much larger capital gains bill if he sells, and can block your Medicaid eligibility for years if you need long-term care within five years of the transfer. For most families, an outright lifetime gift is the most expensive way to get the house to the next generation.
How the Deed Transfer Works
Gifting a house means transferring legal ownership through a deed. A warranty deed guarantees you hold clear title and have the right to convey it. A quitclaim deed transfers whatever interest you have without making any promises about the title. Either can work between a parent and child, but a warranty deed gives your son stronger protection if title problems surface later.
The deed identifies you as the grantor and your son as the grantee, includes the full legal description of the property (usually copied from the existing deed), and states that the transfer is a gift. You sign it in front of a notary, then file the notarized deed with the county recorder where the property sits. Recording creates a public record of the ownership change and protects your son’s interest against later claims.
What Happens to the Mortgage
Most mortgages contain a due-on-sale clause that lets the lender demand full repayment when ownership changes. Federal law carves out an exception for family transfers. The Garn-St. Germain Act prohibits lenders from enforcing a due-on-sale clause when a borrower transfers a home secured by a residential lien to their children, and the protection covers properties with fewer than five dwelling units.1Office of the Law Revision Counsel. 12 U.S. Code 1701j-3 – Preemption of Due-on-Sale Prohibitions
Here is the catch. The mortgage does not transfer with the deed. Your name stays on the loan, and you remain personally responsible for every payment. If your son stops paying, the lender comes after you. Meanwhile, your son owns a house with a lien he has no legal obligation to service. The clean fix is having him refinance into his own name, though he has to qualify on his own credit and income.
Federal Gift Tax and Form 709
The federal gift tax annual exclusion for 2026 is $19,000 per recipient.2Internal Revenue Service. What’s New — Estate and Gift Tax Almost any house exceeds that, so you will need to file IRS Form 709 by April 15 of the year following the gift.3Internal Revenue Service. Gifts and Inheritances
Filing does not mean writing a check. The amount above the annual exclusion reduces your lifetime unified credit, which is $15 million per individual for 2026.2Internal Revenue Service. What’s New — Estate and Gift Tax Actual gift tax kicks in only after cumulative lifetime taxable gifts and your estate cross that threshold. For the vast majority of families, the lifetime exemption absorbs the full value of a home.
If you are married, you and your spouse can elect on Form 709 to treat the gift as coming half from each of you, doubling the annual exclusion to $38,000.4Office of the Law Revision Counsel. 26 U.S. Code 2513 – Gift by Husband or Wife to Third Party More importantly, gift splitting draws the taxable amount against both spouses’ lifetime exemptions instead of one. Both spouses must consent, and in most cases each files a separate return.5Internal Revenue Service. Instructions for Form 709 (2025)
Form 709 requires either a qualified appraisal or a detailed explanation of how you determined the home’s fair market value.5Internal Revenue Service. Instructions for Form 709 (2025) A professional appraisal, typically $300 to $700 for a single-family home, locks in the number and starts the statute of limitations running on the gift.
The Carryover Basis Trap
This is the buried cost most families miss, and it is usually much larger than any gift tax exposure. When you gift property, your son inherits your original cost basis: what you paid plus qualifying improvements.6Office of the Law Revision Counsel. 26 USC 1015 – Basis of Property Acquired by Gifts and Transfers in Trust If you bought the house thirty years ago for $120,000 and it is now worth $450,000, your son’s basis is $120,000.
If he then sells for $450,000, he owes capital gains tax on $330,000. Now compare that to inheriting the same house. Property received from a decedent gets a stepped-up basis equal to fair market value on the date of death.7Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent Same house, same $450,000 sale price after your death, and the taxable gain is zero. The difference between gifting during your lifetime and passing the house at death can be tens of thousands of dollars.
Your son can soften this if he actually moves in. A homeowner who has owned and used a property as their main home for at least two of the five years before selling can exclude up to $250,000 of gain, or $500,000 filing jointly.8Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence If the plan is to use the house as a rental or second home, the exclusion does not apply and the full carryover basis problem lands on him.
Separately, many jurisdictions reassess property values when ownership changes, which can push your son’s annual property tax bill well above what you have been paying, especially if you owned the home for decades. Rules and family-transfer exemptions vary by county, so call the assessor before you file the deed.
Medicaid Look-Back Period
If there is any realistic chance you will need Medicaid-funded long-term care within the next five years, gifting your home can be a serious mistake. Federal law requires states to review asset transfers made during the 60 months before a Medicaid application.9Office of the Law Revision Counsel. 42 U.S. Code 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Any transfer for less than fair market value, including an outright gift, creates a penalty period of Medicaid ineligibility.
The penalty is calculated by dividing the uncompensated value of the transferred asset by the average monthly cost of nursing home care in your state. A $300,000 home in a state where nursing care averages $10,000 a month produces 30 months of ineligibility. During that stretch, you pay for your own care. Families who gift the house and then face an unexpected health event within five years often end up in a genuinely dire spot.
A narrow caregiver child exception exists: you can transfer your home to a child who lived with you for at least two years immediately before you entered a nursing facility and provided care that kept you out of one during that period.9Office of the Law Revision Counsel. 42 U.S. Code 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets Documentation standards are strict and vary by state, so run this past an elder law attorney before you rely on it.
Better Ways to Get the House to Your Son
Given the basis problem and the Medicaid exposure, an outright lifetime gift is often the wrong tool. Two alternatives solve most of the same problems without the tax bill.
Transfer-on-Death Deed
More than half the states allow transfer-on-death deeds, which name a beneficiary who automatically receives the property at your death without probate. You keep full ownership and control during your lifetime, including the right to sell or change the beneficiary. Because the property passes at death, your son gets the stepped-up basis rather than your carryover basis.7Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired From a Decedent There is no Medicaid look-back penalty either, since you still own the house. If your only real goal is skipping probate, a transfer-on-death deed gets you there without the tax cost.
Retained Life Estate
A life estate deed transfers ownership to your son now while reserving your legal right to live in the property for the rest of your life. He holds a remainder interest and becomes full owner when you die. Because the property is included in your estate, he still gets a stepped-up basis at your death. The trade-offs: the transfer of the remainder interest is a gift for gift tax purposes, and as a future interest it does not qualify for the annual exclusion, so you report the full value calculated from IRS actuarial tables based on your age. A life estate is also still a transfer for Medicaid look-back purposes, so it needs to happen more than five years before any potential application.
Costs to Budget For
Even without a purchase price, transferring the deed involves real out-of-pocket costs:
- Attorney fees to draft the deed and check title, typically a few hundred dollars for a straightforward transfer and more if trusts or Medicaid planning are involved.
- Appraisal, generally $300 to $700 for a standard single-family home.
- County recording fee, usually between $50 and $150.
- Notary fees, modest and capped in most states at $5 to $15 per signature.
- State or local real estate transfer taxes, which some jurisdictions waive for family gifts and others do not. Check with your recorder before filing.
- Title insurance for your son, since your existing owner’s policy can be voided by the transfer.
None of these should exceed a few thousand dollars combined for a simple transfer. Unwinding a flawed transfer after the fact costs far more, so the appraisal, deed, and Form 709 are worth getting right the first time. Before you sign anything, sit down with a tax professional and, if long-term care is on the horizon, an elder law attorney. The right structure for your family may not be a gift at all.