My spouse and I expect a mutual consent divorce (mostly and as of now).
We co-own the house we live in which we would like to transfer to our only adult son (25 year old) as part of the divorce separation agreement. I request your advice on the best way to handle this with least tax consequences and complications to our son and overselves.
Some options/questions that come to my mind are as below, though there may be a better way to do this.
1) Should we do it as a 2 step process where one of us gives away their half to the other spouse, and then that person transfers it?
2) Can we do it as a 1-step process where we both write off the house to our son?
3) How to transfer the house to our son? Should we first put it in a trust or can we just go to the title company and make this transfer?
4) Should we transfer to our son before or after or during the divorce?
5) Which options would require submitting 709 gift tax return form?
6) I have been submitting 709 for cash support (not split) to our son until this year. Will the IRS get confused if we submit a new gift transfer together split for this house? We live in community property state (CA).
I am not sure what's the best way to go about and would be grateful for any suggestions. Thank you!
