quitclaim deed

[Life2023]

If my husband give me his quitclaim deed for our house this year, but I have not sold the house, do I need to pay taxes for the gift this year or do I pay taxes later on after we sell the house next year or the year after? I actually paid more on the house than him, as he did not pay any mortgages for 5 years and we only own the house for 8 years.  Is it better that he did not give me the quitclaim deed but later on give me the profit when we sell the house assuming our tax rate is 16% when we sell the house? Please note that we are getting divorce this year. Thank you very much.

[Anonymous_]

Is this an actual gift or some sort of settlement incident to a divorce?

There is no gift tax on transfer between spouses except under certain circumstances which do not seem to apply here.

See https://www.irs.gov/instructions/i709#en_US_2022_publink16784xd0e489

Generally, without more specific information, you will be taking your husband's basis in the property (i.e., a carryover basis). 

If you are actually divorcing, you should consult with local legal counsel.

[urtexas]

Have you filed the quit claim deed at the courthouse?   It's worthless unless you file it!

[Anonymous_]

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@urtexas wrote:

Have you filed the quit claim deed at the courthouse?   It's worthless unless you file it!

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The deed is not "worthless" as between the parties to it (the grantor and the grantee).

[NCperson]

@Life2023 have you two agreed on how the capital gains will work when you sell?  if the gain is under $250,000, there is no issue, but above that, you will be on the hook for the rest. (assuming the home is sold after the divorce is finalized) 

[TomD8]

"do I need to pay taxes for the gift this year"

No.

"do I pay taxes later on after we sell the house next year or the year after?"

Possibly.  If you have a capital gain from the sale that exceeds your capital gain exclusion amount (currently $250,000 if filing Single; $500,000 if filing jointly), then you will owe a capital gains tax.  You qualify for the exclusion if you've owned and lived in the home as your primary residence for at least two of the five years leading up to the date of sale.