I’m Ted Thomas, and today I’m going to answer your question about quitclaim deed tax implications. If you make money, there are going to be implications. We’ll get into that.
I’m also going to cover some insider tips on how to make money, not only with tax lien certificates and tax deeds, but what to be cautious of regarding the implications of these quitclaim deeds.
Are there implications on a quitclaim deed? There are a lot of those in addition to any quitclaim deed tax implications.
Table of Contents:
- Tax Liens, Tax Deeds & Quitclaim Deeds
- What Is a Quitclaim Deed?
- The Tax Implications of a Quitclaim Deed
- Using a Quitclaim Deed for Property Transfer
- Retaining a Real Estate Attorney for a Quitclaim Deed
- Resolving Quitclaim Title Issues
- Selling a Home With a Quitclaim Deed
- Conclusion
Tax Liens, Tax Deeds & Quitclaim Deeds
I’ve been involved in teaching tax liens and tax deeds for over 25 years, and I’ve been investing for over 30 years. This is a huge business of abundance. There’s a ton of money to be made, but there are certain steps that you’re going to have to follow.
Tax deeds come from properties that are in default because the owner didn’t pay property taxes. That means the property has some problems.
When properties have problems, very few people know how to clear the problem. So, they’re going to try to cover all their assets simply by saying they’re going to give a quitclaim deed. Let’s talk about the repercussions of a quitclaim deed including quitclaim deed tax implications.
What Is a Quitclaim Deed?
A quitclaim deed is a disclaimer that means whoever is handing that quitclaim deed to you is disclaiming all responsibilities.
Many counties will issue a tax deed to you with a quitclaim deed. When they do that, they have disclaimed any responsibility for the title report, any mortgages or any liens.
You have now just bought a big pot full of problems that will probably have to be cleared with a quiet title.
The Tax Implications of a Quitclaim Deed
Let’s talk about quitclaim deed tax implications. If you make a profit, that means you have to pay taxes. If you have a loss, you probably should claim it on your taxes. Just think of those implications.
In a nutshell, quitclaim deed tax implications come from the gains or losses associated with the property transfer rather than the quitclaim deed itself, which was just the instrument used to transfer the property.
I’m not an attorney or a CPA, I’m just an investor who learned how to do this over 30 years of experience. I’ve taught thousands of people how to do this and seen quite a few problems. Let me give you the steps to make sure that you avoid having problems.
Using a Quitclaim Deed for Property Transfer
Issuing a quitclaim deed does not require an attorney. A quitclaim deed is a legal instrument, used to transfer the interest in real property from one person or entity to another entity. It’s as simple as that.
The quitclaim means they’re disclaiming any responsibility. That doesn’t mean that the title to the property is clear. It doesn’t mean anything is clear. It simply means you have a quitclaim deed, and someone else is disclaiming everything.
Retaining a Real Estate Attorney for a Quitclaim Deed
The title paperwork might have been completely mismanaged by the previous owner or the county or anybody involved. If that’s the case, you’ll have to get it under control.
Does that sound simple? It is simple if you do it the right way, and the right way is you’re going to hire an attorney.
You’re not going to hire an injury attorney or someone who does personal lawsuits. You’re going to hire a real estate attorney who can tell you all the steps to the quitclaim. You want someone who knows the step-by-step process.
You can’t sell the property with a quitclaim, or you can and tell someone else to do that. However, understand that when you’re selling it that way, you’re passing on whatever problems there are on the property.
My suggestion is to get the right answers. Buy the right information from an attorney.
Resolving Quitclaim Title Issues
When we buy a property from the county, the title might not be clear. We’re getting a bargain so we might have to spend a little time and a little effort getting the proper title and proper insurance on that property.
Is it a headache? No. It costs you about $3,000 or $4,000, and it could take 2 or 3 months or a whole year for the attorney to do that. You need to do it right so that you don’t have problems later.
Selling a Home With a Quitclaim Deed
I have students who get property at tax auctions and don’t know much about it, but they have a chance to sell it for a huge profit.
For example, I had a couple in Phoenix, Arizona who spent $11,000 and went to look at the property before they spent the money,
It turned out to be a nice condo worth almost $200,000. There was no mortgage so they sold it using Zillow.
They didn’t know anything about the property so they sold it with a quitclaim deed to the new buyer.
The new buyer knew that they didn’t want to have to do work with the title and didn’t mind. The buyer gave them $169,000 after the commissions were paid. So, they made over $150,000 on that property and had no liability because they sold it with a quitclaim deed.
If you’re the one buying the property, just understand that if you accept a quitclaim deed, it’s your job to get a quiet title.
Conclusion
We hope you enjoyed Ted’s lesson, “Quitclaim Deed Tax Implications.”
When you make a profit or a loss from real estate investing, there are going to be tax implications. However, quitclaim deed tax implications are not the only repercussions associated with using quitclaim deeds.
If someone transfers ownership of a property to you using a quitclaim deed, which is a common occurrence at a tax sale in many counties, then there is no guarantee about the condition of the property or the title.
The seller is disclaiming everything and all responsibilities, so as the buyer, you’re the one now responsible for any issues. To clear the title, the prudent thing to do is hire a real estate attorney and ask about a quiet title.
If you’d like to know more, Ted provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching with certified coaches.
You can learn how to reap the huge rewards from tax lien and tax defaulted property investing!
Want to learn how to purchase bargain real estate? Would you like to buy mortgage-free property for pennies on the dollar? Or learn how to earn double-digit interest rates secured by real estate? Then get started today with this Free Gift.
Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.
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