Does adding your child's name to the deed on your house change your taxes?

[SusanH · Accepted solution]

Initially it doesn't do anything other than make them legally obligated to pay the property taxes and able to deduct them if they paid them. If the child is also obligated to pay on a mortgage loan then they would also be entitled to the mortgage interest deduction.

One thing to be aware of is that the basis in the house is considered to be split after adding a child to the title. Basis is what you are considered to have paid for the house. In broad terms, the price you paid plus any improvements (new roof, siding etc) is what makes up the basis. Basis is important because it is what is considered when determining the amount of gain when the property is sold. If an owner passes away, there is an automatic increase in basis up to the market value of the property at the time of the person's passing. The heirs benefit from  this automatic bump up in basis as it reduces the amount of any gain if/when the property is sold. This automatic bump up does not apply to the surviving owner's half. 

You may wish to contact an estate planning professional prior to adding someone to the deed.