A quitclaim deed does not always change your yearly property tax bill right away. Still, it may affect other taxes—like capital gains tax or gift tax—when you give or get property. The impact depends on what you do with the quitclaim deed. The actual rules come from the IRS tax code, state tax board rules, and local assessor’s offices. When you do not follow these rules, you might owe extra taxes, face a penalty, or even lose your right to the property. In some states, recording the wrong value or not following deed steps can lead to a fine or criminal charge.
About 36% of people who transfer property using quitclaim deeds do not know the full tax effects before they sign.
Here’s what you will learn:
- 🏠 If using a quitclaim deed changes your property taxes for all property types
- 💡 When and why you might owe more tax—or not owe at all
- ⚠️ Mistakes people make with quitclaim deeds and the costs
- 📋 How federal and state rules for quitclaim deeds work together
- 🚦 Steps you have to follow on forms so you do not get stuck with a tax problem
What is a Quitclaim Deed? Plain and Simple
A quitclaim deed is a paper that lets you give your rights in a property to someone else. The person who gives the property is called the grantor. The person who gets the property is the grantee. There are no promises that the grantor owns the property free and clear understanding quitclaim.
Unlike a warranty deed, a quitclaim deed does not guarantee the title is clean or even that you truly own what you give away. You just give up your claim. With a warranty deed, the person giving the property promises they own it and will fix any title problems. With a quitclaim deed, you give up whatever rights you have, but you make no promises about what those rights are.
Most people use quitclaim deeds to move property to a family member, fix misspelled names on property records, take a name off after divorce, or move property to a trust. The speed and low cost make them popular for family moves. Do not use a quitclaim deed if you buy a home from a stranger read about differences.
How Federal Law and Taxes Work with Quitclaim Deeds
The IRS is involved if you give away property using a quitclaim deed. If money is not exchanged, the IRS sees this as a gift. If the value is over $18,000 (2025 limit per person), you must file a Form 709 for the gift tax—even if you do not pay tax right away see more on federal rules.
The grantor keeps their cost basis in the property. If the grantee sells the place, they might pay more in capital gains tax. This is a huge problem people miss. If you get property via quitclaim deed and later sell it, you pay taxes on the gain using the original owner’s purchase price—not the current market value.
If the quitclaim deed is part of a divorce settlement, the IRS usually does not treat it as taxable read more on estate. If it is a gift to a charity, the donor may get a deduction and no capital gains applies. Federally, quitclaim deeds do not remove any mortgages or tax liens on the property read about quitclaim deeds.
Key Statutes and Rules
- IRS Gift Tax: Internal Revenue Code Section 2501
- Capital Gains: Internal Revenue Code Section 1015 (Carryover Basis Rule)
- Divorce Exemptions: Internal Revenue Code Section 1041
How State and County Rules Affect Property Taxes After a Quitclaim
States and counties control property taxes: this is your yearly bill. When a quitclaim deed is filed, some states re-assess the home’s value if there is a full change of ownership. Your property tax can go up or down. Other places keep the old value until you sell it again.
Certain states (like California) don’t change your tax base if the quitclaim is between parents and kids, but may re-assess in most other transfers see California rules. Texas and Florida often re-assess the value when the property changes ownership, even with quitclaim deeds. Some states also charge transfer taxes on top of yearly property tax bills. Not recording the change right can lead to fines.
Many jurisdictions have specific triggers that prompt reassessment, and a change in ownership is often one of them learn about assessment. Some transfers qualify for exemptions, especially those between family members or when adding a spouse to the title.
States with Big Differences
- California: No tax reassessment for parent-child via Proposition 58. Other transfers likely get reassessedsee California code.
- New York: Likely to re-assess property value after a quitclaim, raising yearly taxes.
- Texas: New owner almost always gets a new assessment on county records.
- Florida: Re-assessment happens on most transfers, causing tax bills to go up.
- Ohio: Transfer triggers reassessment in most cases, raising yearly tax burden.
The Capital Gains Problem: Why a Quitclaim Deed Costs You Later
This is the most painful tax issue people face with quitclaim deeds. When you get property via quitclaim, you keep the original owner’s cost basis. This means you owe tax on a larger gain when you sell. Let me explain with real math. If your mom bought a house for $100,000 in 2000 and quitclaims it to you in 2024 when it is worth $500,000, your cost basis is still $100,000. If you sell the house for $500,000, you owe capital gains tax on $400,000—the entire increase.
Federal capital gains tax at the top rate is 20%. Add in net investment income tax (3.8%) and state tax (varies). You could owe $288,000 or more in taxes read more on capital gains. If your mom had left you the house in her will instead, you would get what is called a “step-up in basis.” Your new cost basis would be $500,000 (the market value when she died). If you then sold for $500,000, you owed zero capital gains tax.
This difference is enormous. A quitclaim deed for an old family home can cost the new owner hundreds of thousands of dollars in future taxes. Many people do not know this and think they are helping their kids. The opposite happens—they create a giant tax trap.
Example Table
| Original Owner’s Action | Tax Result When Grantee Sells |
|---|---|
| Quitclaim deed at $100k basis value | Pay capital gains on full $400k gain |
| Leave in will (step-up basis) | Pay zero capital gains tax |
| Transfer to trust before death | Depends on trust type and rules |
Gift Tax and the IRS Form 709
When you give property worth more than $18,000 (2025) using a quitclaim deed, you must report it to the IRS see IRS rules. You file Form 709 (United States Gift Tax Return) with your tax return. You do not pay tax right away if it is under your lifetime gift limit ($13.61 million in 2025), but you must report it.
If you do not file the form, you may face penalties. The penalty is 5% of the tax owed, or $500, whichever is higher. If the IRS finds out later, they can charge you interest and demand the tax payment. Some people forget to file and later face big bills.
Married couples have a combined lifetime limit of $27.22 million in 2025. You can give $18,000 per person per year without filing. If you give $50,000 to one child, you file a Form 709 to report the extra $32,000 against your lifetime limit. Once your lifetime limit is gone, every gift gets taxed—usually 40% of the amount over the limit.
Transfer Taxes: The Hidden Cost
Transfer taxes are fees that states and counties charge when property changes hands. These are not the same as property taxes. Transfer taxes happen once when the deed is recorded. They are based on the property’s value or the sale price. Some states charge 0.01% of value, and others charge 2% or more.
New York has one of the highest transfer tax rates in the nation. California charges transfer tax on most deeds. Texas has no state transfer tax but some counties charge local taxes. Many jurisdictions add transfer taxes on top of each other. A county tax of 1% plus a city tax of 1% equals 2% total.
If you transfer a $500,000 house with a 2% transfer tax rate, you pay $10,000 just in transfer taxes learn about transfer costs. Some transfers are exempt from transfer tax—divorce transfers, gifts to family, and transfers to trusts often qualify. You must file the right forms to claim the exemption. If you do not claim it, you pay the full tax.
Recording Requirements: The Most Overlooked Step
After you sign a quitclaim deed, you must record it at the county recorder’s office. Recording makes the deed official and part of the public record. If you do not record it, the transfer is not legally complete. The new owner is not officially on record. Tax bills may still go to the old owner. Legal notices may not reach the new owner.
Each state and county has its own recording process and fees see recording details. Recording fees vary from $20 to $500 depending on the location. Some places require extra forms like a property transfer tax affidavit or a declaration of value. Some states demand notarization. Others require witness signatures.
Missouri requires the deed to be in dark or black ink on white paper. Indiana requires a specific statement affirming the preparer’s name. New Mexico requires both spouses to sign if the property is community property. Ohio requires the grantor’s marital status to be listed see state requirements. Missing even one detail can make the deed void. Recording mistakes create huge problems later when trying to sell or refinance.
Scenarios: Who Gets Hurt or Helped?
| Situation | Result |
|---|---|
| Mom uses quitclaim to gift house to daughter in CA | Daughter gets same cost basis, pays taxes on full gain when she sells (not stepped up to market value). No immediate reassessment if parent-child. |
| Couple divorce, spouse gets house via deed | No capital gains or gift taxes on transfer due to divorce. Spouse assumes property tax and any liens. |
| Business transfers property to owner via deed | Often triggers tax reassessment and higher yearly property tax bill. Owner gets original cost basis. |
Real-World Examples (With Mini-Scenarios)
Example 1: The Florida Family Home
Rosa bought her Florida home in 1985 for $95,000. In 2024, she quitclaims it to her son when it is worth $450,000. The county revalues the house for tax purposes. Her son’s annual property tax jumps from $1,700 to $3,900 because now it is taxed at today’s value—not Rosa’s old rate. When he sells it five years later for $480,000, he owes capital gains tax on $385,000 (the gain from his $95,000 basis). At 23.8% combined rate, that is $91,630 in taxes—money he was not ready for.
Example 2: The Michigan Family Cabin
Sam transferred a family cabin in Michigan to his brother with a quitclaim deed. Sam bought it for $120,000. It is now worth $280,000. The transfer counts as a gift, so Sam reports the $160,000 value over the annual limit to the IRS on Form 709. Sam’s brother now has Sam’s $120,000 basis. Later, Sam’s brother sells the cabin for $290,000. He pays capital gains tax on $170,000 of gain—a bill his brother did not warn him about.
Example 3: The Texas Divorce
Nathan and Lynn divorce in Texas. As part of the divorce order, the house is quitclaimed to Lynn. She pays no capital gains tax on the transfer—it is covered under Internal Revenue Code Section 1041. The county still re-assesses the house, raising her property taxes. Lynn keeps Nathan’s original $180,000 cost basis. When she sells for $350,000, she pays capital gains tax on $170,000 of gain. Nathan is not responsible for this tax—Lynn is, because she is now the owner.
Example 4: The Medicaid Problem
An older adult tries to qualify for Medicaid and uses a quitclaim deed to give her home to her daughter to get it out of her name. This happens three years before she needs nursing care. When Medicaid reviews her finances, they look back five years. The transfer is found. Medicaid disqualifies her because the home value counts as an asset she “gave away.” She has to wait five years from the transfer date before she can reapply—and she still has to pay for her own nursing care until then read about Medicaid planning.
Mistakes to Avoid
Not checking for liens or taxes due — The new owner gets stuck with old debts, foreclosure, or tax bills. Always run a title search before transferring.
Writing down a transfer value that is too low or “$0” — Undervaluing the property breaks state law and can lead to fines of $500 to $5,000 or more. The state can also reject the deed.
Not recording the deed with the county — New owner misses tax notices, legal documents, and may not be recognized as the legal owner. This creates huge problems later.
Not consulting a tax expert before giving property to family — Unexpected capital gains or gift tax bills when selling later. A simple consultation costs $200-$500 and saves thousands.
Not filling out each field on the quitclaim form — An incomplete deed may be void. Courts will not recognize the transfer. Property stays in the original owner’s name on records.
Putting a spouse’s name on the deed without their signature — In many states, this is illegal. The deed is void and cannot be recorded.
Trying to use a quitclaim for a large purchase from a stranger — You have no protection. You might not get real ownership rights. Always use a warranty deed when buying from someone you do not know.
Not updating the lender if you still have a mortgage — Your name stays on the loan even if someone else owns the house. If they stop paying, the bank comes after you and ruins your credit learn more.
Forgetting to file Form 709 for large gifts — The IRS catches it later. You face penalties and interest charges on unpaid gift taxes.
Key Differences: Quitclaim Deed vs. Warranty Deed vs. Transfer on Death Deed
| Feature | Quitclaim Deed | Warranty Deed | Transfer on Death Deed (TODD) |
|---|---|---|---|
| Title Protection | None—”as is” transfer | Strong—covers full ownership and known/unknown claims | No immediate protection—takes effect at death |
| Used For | Family transfers, divorce, clearing up title | Sales, when the buyer needs protection | Estate planning without probate |
| Tax Impact | May trigger reassessment/gift/capital gains | Same, but grantee has recourse for hidden problems | Step-up in basis at death—major tax benefit |
| Revocable | No—cannot be undone once recorded | No—cannot be undone once recorded | Yes—can be canceled anytime before death |
| Probate Avoidance | Yes, if transferred before death | No—property goes through probate | Yes—transfers directly at death |
The Transfer on Death Deed is often better than a quitclaim for family transfersread more on TODD. You keep ownership and control. Your heirs get a step-up in basis—no capital gains tax. It is revocable, so you can change your mind. It skips probate when you die. You do not trigger reassessment while you are alive.
Pros and Cons of Using a Quitclaim Deed
| Pros | Cons |
|---|---|
| Easy and fast for basic transfers | No guarantee you own clear property rights |
| Low cost to create (document only) | Property tax can rise if re-assessed |
| House skips probate with early transfer | Liens and debts stay with the property |
| May be tax neutral in divorce | Gift/capital gains tax surprise if not planned for |
| Good for fixing title mistakes | Not safe for buying from someone you do not trust |
| Grantee gets property quickly | Grantor loses control forever—cannot undo it |
| Works in all 50 states | May affect ability to refinance if mortgage remains |
| Simple one-page document | Basis carryover creates huge future capital gains |
Do’s and Don’ts for Quitclaim Deeds
Do:
- Double-check for liens before signing.
- Record the deed at your county office fast.
- List full names and addresses of all parties.
- Use correct property value for local tax rules.
- Call a tax pro if you have any doubts.
- Get the deed notarized even if your state does not require it.
- Keep copies for your records and the other party.
Don’t:
- Skip the notary or needed witnesses—deed may be void.
- Leave fields blank on the deed.
- Transfer property for “$1” to dodge taxes.
- Wait to record the deed—tax and legal rights may be delayed.
- Skip state-specific forms or steps.
- Give property to children just to avoid probate without knowing the capital gains trap.
- Use a quitclaim deed when you still have a large mortgage without asking the lender first.
Step-by-Step: Fill out a Quitclaim Deed
Step 1: Get the correct quitclaim deed form for your state.
Each state has different forms and requirements. Search your county recorder’s office website for the official form. Some counties provide free templates.
Step 2: Write grantor and grantee legal names.
Use the exact legal names as they appear on driver’s licenses or prior deeds. If the grantor’s name is “Robert” on the last deed, write “Robert”—not “Bob.” Even small spelling differences can void the deed or cause recording problems.
Step 3: Put a correct property description.
Look at the last deed or a recent tax bill. Copy the exact legal description—it is not just the street address. Legal descriptions often include lot numbers, subdivision names, and boundary descriptions.
Step 4: Sign with a notary or needed witnesses.
The grantor (person giving the property) signs. The grantee does not need to sign in most states. Get a notary public to notarize the grantor’s signature. Some states require witnesses. Do not skip this step or the deed may be rejected at recording.
Step 5: File (record) the deed at the county recorder.
Go to the county recorder’s office where the property is located. Bring the signed, notarized deed and payment for recording fees. The recorder will stamp the deed and give you a copy with the recording number.
Step 6: Pay any transfer taxes needed.
Some states and counties charge transfer taxes. File the required tax forms and pay at the recorder’s office or by mail before recording. If you do not pay, the deed will not be recorded.
Step 7: Update county tax office records to stop future surprises.
Contact the assessor’s office and tell them the property has changed ownership. Ask if reassessment will happen and when. Ask about exemptions you might qualify for.
Quitclaim Deeds in Specific Situations
Divorce and Quitclaim Deeds
When couples divorce, one spouse often quitclaims their interest to the other. The IRS does not treat this as a taxable transfer under Internal Revenue Code Section 1041. The receiving spouse does not pay capital gains tax on the transfer itself. The spouse who gets the house keeps the same cost basis the couple had. If the couple bought for $200,000 and now the house is worth $400,000, the basis is still $200,000 for the new owner.
When that spouse sells the house later for $400,000, they pay capital gains tax on $200,000. There is no step-up in basis. If the divorce order says the house must be quitclaimed, courts can require it. One spouse cannot refuse to sign if the judge orders it.
Quitclaim Deeds to Trusts
Many people quitclaim property into trusts for estate planning. This is different from giving it to a person. A revocable living trust lets you keep control while you are alive. When you die, it transfers to beneficiaries without probate. The cost basis carries over to the trust and then to beneficiaries—so the capital gains issue still exists. An irrevocable trust is different. Once property is in an irrevocable trust, you cannot get it back. This may affect property taxes and your ability to borrow against the property.
Quitclaim Deeds and Mortgages
This is critical: a quitclaim deed does not remove a mortgage. If you quitclaim your house to your daughter but you are still on the mortgage, you stay responsible for payments. If she does not pay, the bank can foreclose and ruin your credit. The best option is to have her refinance the mortgage in her name only. Some lenders allow a “loan assumption” where she officially takes over the loan. Always call your lender before signing a quitclaim deed if you have a mortgage.
Medicaid Planning and Quitclaim Deeds
Some people try to use quitclaim deeds to protect assets for Medicaid eligibility. Medicaid pays for nursing home care, which can cost $100,000+ per year. To qualify, you must have assets below a limit (varies by state). Someone might quitclaim their house to a child to get it “out of their name” so they can qualify for Medicaid sooner.
This strategy usually fails. Medicaid has a five-year look-back periodread about Medicaid. Any property transferred in the five years before applying for Medicaid is counted as an asset. If you quitclaim your home three years before applying, Medicaid counts it as yours and you are disqualified. You must wait five years from the transfer date to apply again.
Even then, Medicaid can demand that the grantee (the child) sell the property and use the money to pay for your care. This is called “Medicaid recovery.” So the house is not truly protected. A lawyer who specializes in elder law can set up proper Medicaid planning that actually works.
Refinancing After a Quitclaim Deed
If you need to refinance a home after a quitclaim deed, the process gets harder. The lender wants to make sure the new owner owns the property free and clear (or mostly clear). The new owner must provide the recorded deed, proof of ownership, and a title search. If the property has liens or unpaid taxes, the lender may refuse to refinance.
If the original owner is still on the mortgage, some lenders require both owners to refinance. This makes it expensive and slow. The best practice is to refinance before doing a quitclaim deed see refinancing facts. If the new owner has better credit, they can refinance first. Then the original owner quitclaims. This way, the property has only one name and one mortgage.
State-Specific Nuances You Need to Know
California uses Proposition 13 to limit property tax increases. If you are the parent giving to a child, you can file a claim to avoid reassessment. You must file within set deadlines or lose the exemption. Other transfers (like child to grandchild) do not qualify for this exemption and trigger reassessment.
Texas has no state transfer tax, but some counties have local taxes. Property reassessment happens on most transfers. Texas also allows people to transfer property using a Transfer on Death Deed instead of a quitclaim, which may be better for your situation.
New York charges high transfer taxes and also charges a mansion tax on properties over $1 million in certain areas. These taxes stack on top of each other. A $2 million property might have $100,000+ in transfer taxes alone.
Florida has no state income tax or capital gains tax, but they charge transfer taxes on deeds. Property reassessment happens on most transfers. If you are giving property to a family member, check if your county has an exemption for family transfers.
Ohio requires the grantor’s marital status on the quitclaim deed. If you are married and do not list your spouse, the deed may be rejected. You also must list the county where the grantor lives.
The Tax Basis Trap: Why It Matters
Many people do not understand cost basis. It is the amount you paid for property. When you sell, capital gains tax is owed on the difference between your basis and the sale price. With a quitclaim deed, the new owner inherits the old owner’s basis—not the current market value.
This is called carryover basis. It is different from a step-up in basis, which happens when someone inherits property through a will. With a step-up, the new owner’s basis becomes the market value on the date of death. This wipes out the capital gains tax.
Example: Your grandmother bought a house in 1960 for $25,000. In 2024, it is worth $600,000. If she quitclaims it to you now, your basis is $25,000. If you sell for $600,000, you owe capital gains tax on $575,000. At 23.8% combined rate, that is $137,850 in taxes. If she leaves it to you in her will, your basis becomes $600,000. If you sell for $600,000, you owe zero capital gains tax. The difference is $137,850—money that could be yours.
This mistake ruins family finances. A parent thinks they are helping their child by quitclaiming a family home. Instead, they create a huge tax bomb. By the time the child realizes it, the transfer cannot be undone. The deed is recorded and permanent.
FAQs
Does using a quitclaim deed always change your property tax?
No. It sometimes raises taxes if the county revalues, but some transfers—like parent-to-child in some states—do not cause an increase. Check with your county assessor first.
Does a quitclaim deed protect you from old debts or liens?
No. You may still owe taxes or liens attached to the property because the deed gives no protection. Title search before transfer.
Is the deed reported to the IRS?
No. The deed itself is not sent to the IRS, but you might have to file a tax form if gift or capital gains taxes apply. Large gifts require Form 709.
Can I put “$1” as the value on the deed to avoid taxes?
No. Doing this breaks state laws and may cause fines of $500-$5,000 or denial of the transfer. Use the actual market value.
Is it safe to use a quitclaim deed when buying from a stranger?
No. Mostly for trusted transfers—there is no guarantee you are getting full rights to the property. Use a warranty deed.
Will I owe capital gains if I sell a property I got from a quitclaim deed?
Yes. You pay capital gains on the profit, using what the last owner paid. You do not get a step-up (unless you inherited it). Cost basis carries over.
Do I avoid probate if I use a quitclaim deed for family transfers?
Yes. If done before the original owner dies, property can skip probate—but only if all paperwork is done correctly. Record it fast.
Is it a mistake to use a quitclaim deed for business property?
Yes. Business and investment properties often trigger tax reassessment and higher taxes. Consult a tax expert first.
Should I record the deed right away?
Yes. Recording makes the deed official for taxes, notices, and legal issues. Delayed recording causes major problems.
Can I use a quitclaim deed in all states?
Yes. All states allow quitclaim deeds, but the rules, tax impact, and forms are different everywhere. Always check your state and county rules before starting.
Does a quitclaim deed remove my mortgage?
No. You stay responsible for the loan if your name is on it. Have the new owner refinance to remove your liability.
What is the cost to file a quitclaim deed?
Cost varies by county from $20-$500 for recording. Add notary fees ($5-$30), potential transfer taxes (0.01%-2% of value), and attorney fees if you hire help ($200-$1,000).
Is a quitclaim deed the same as giving someone ownership?
Mostly yes, but with no protection for the grantee. The grantor promises nothing. Use a warranty deed if buying. Use quitclaim for trusted family transfers.
Related reading
- If I Buy a Tax Deed Do I Own the Property? + FAQs
- Does a Quitclaim Deed Need to Be Recorded? (w/Examples) + FAQs
- Are Quitclaim Deeds Reported to the IRS? (With Examples + FAQs)
- Tax Consequences of a Quitclaim Deed Explained (w/Examples) + FAQs
- Does a Quitclaim Deed Disqualify a 1031 Exchange? (w/Examples) + FAQs
- Is a Quitclaim Deed Taxable? (w/Examples) + FAQs