Siblings seek to swap interest in inherited properties

We’re concerned that when it is time to sell either property it may be complicated by the half ownership on the title, particularly if one of us passes away before the other.

The properties are currently assessed at similar values. Is there a simple way to place each property solely in one name rather than buying out the other? If all parties are in agreement, could there be a quitclaim title transfer for both properties through a title search company? Or, is a lawyer required for this transaction?

A: It shouldn’t be too difficult to arrange the title of each home in such a way that each of you owns one home in its entirety. Your brother could convey his interest in the home you prefer to you and you could convey your interest in the home he lives in to him.

Depending on where you live, the paperwork might be as simple as preparing two deeds for the transfers. The key is that the deeds need to be prepared properly, otherwise you would wind up with a mess on your collective hands down the road.

For example, real estate transfers in some states may require other documentation that could include the payment of transfer fees, filing or recording charges, and municipal inspections. To get started, you should call your local municipality to see what their requirements are for the filing or recording of a deed in your specific situation. Additionally, in some states and localities, the transfer could potentially trigger the reassessment of the property for real estate tax purposes.

That’s why we think you should hire a local real estate professional to assist you in preparing the deeds and any other documentation you’ll need. This professional may be a real estate attorney, settlement agent or title company representative, depending on where the properties are located, and how each of those parties works in real estate transactions. If the properties are in two different states, you may need a professional who understands each area’s specific rules and requirements.

But, we think you should spend a little bit of money to make sure you do everything correctly. You might also want to have a conversation with your tax preparer or an accountant who has extensive experience with real estate transfers. While you may not see the transfers as something that could trigger an income tax issue, you are transferring your ownership of a home you own to your brother and he will do the same with the property he owns. That could have tax repercussions down the line, depending on how these transactions are viewed by the IRS.

At play is the value of the properties when your father died, and their value today. Usually, when a parent dies, the heirs inherit the property at its value around the time of the parents death. If the properties had the same value at the time of your father’s death and are still about the same value, there may not be any tax considerations. But, it would be nice to know before you sign and file the deeds.

(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, a financial wellness technology company. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)