Need Advice on House Transfer

Hello, everyone. I have dabbled a little in the past in real estate, so not a complete newbie. Still would like some advice from seasoned investors.

My mother, who is in her 70’s, is wanting to move back home to Kansas. She owns her home here in North Texas free and clear. It’s probably worth about $140,000. She does not need the cash out, and upon her death, my sister and I would inherit the house. My sister lives out of state, and the house is about 3 miles from me, so i plan to use it as a rental property, and will likely rent it to my mother in law. So, this is a good situation for me.

I have several questions:

First, what is the simplest way for my mom to transfer the home to me? A quit claim deed? A warranty deed? I have seen several of these on legal forms websites, and wonder if it is that simple? Just create the form, sign it and get it recorded at the county office? Or should there be more involved, like using a real estate attorney?

Second, my mom is going to owner finance the home for me with no money down. Probably something like $130,000 purchase price at 4% for 30 years. My calculator tells me that is about $620 per month. Add taxes and insurance of about $350 and I’ll be at about $1,000 per month or less. We will rent to my mother in law at something close to that. Maybe $1,100 just to cover any maintenance/repair issues. (the house is only about 6 years old). Market rent for this house would be about $1,400-$1,500 today. Upon my mother’s death, half of the balance remaining on this note would be due my sister as her share of the inheritance.

My mom is fine just doing a promissory note with me and not recording a lien on the property. This would allow me, should I choose to do so, to borrow against the equity, perhaps to provide cash down or rehab on another property or two. The payment to my mom and one potentially on a cash out refi would not be a financial hardship for me from a cash flow perspective.

So, am I missing anything here common sense wise or, more importantly, legally? Just trying to think through this and make the most financially of this opportunity. Any advice on how to maximize this as a tax writeoff and utilize the equity in the home to my advantage would be much appreciated.


There are a lot of issues with what you propose to do. The first thing is your mother can not gift you more than roughly $13,000 dollars per year. To gift this home would take more than 10 years. If you receive a quit claim deed you will owe 50% of the value in taxes roughly for the year it is quick claimed to you. 

Your mom is better off putting this property in an LLC and if she chooses to gift this to you and your sister then she should give each of you about $13,000 in LLC ownership value (Units) per year for 5 or 6 years to convey title.

If she gifts it then your not paying mom a monthly payment for the house value, rather you would be gifting your mom money between you and your sister to live on based on the ability to provide a gift to her from rental income.

The other route is a sale to you and your sister with mom carrying the 1st trust deed note at x interest per year making her the note holder and you and your sister the buyer. Then paying mom monthly mortgage payments as the “Lender” and then mom is getting income and your paying for the house.

If mom passed away during this 30 year mortgage then you and your sister could inherit this property note basically tax free under federal provisions subject to the Texas inheritance tax law.

But do not let your mom quit claim this to you because you will have a rather rude tax bill due the following year.


Thanks for the reply. A little research I have done reinforced what you are saying, that a standard warranty deed is better than a quit claim. But, if I give my mom a promissory note as I outlined above and am making monthly payments, how is it considered a gift?


If you have a title / escrow company record a promissory note and deed of trust on the property at x interest payable as an amortized loan for 30 years which is recorded in benefit of your mother it is not a gift.

If she by what ever deeding method (Warranty or Quit Claim) conveys the property outright to you with no debt against the property it is a gift whether or not you pay her some kind of payment or gift her money monthly or yearly.

It’s the fact that if Mom gives the house to you outright you will owe State and Federal Taxes for income on the value of that property.

Where did you outline a 1st Deed of Trust (Trust Deed) and Promissory Note, you discussed a quit claim or warranty deed these instruments convey title outright (Without Debt), thus requiring you to pay taxes as recipient of a large financial windfall.

These are not what a title / escrow company prepares if your going to pay $130k at 4% interest as your Mom would not be conveying outright title but carrying a mortgage note (1ST TD) against the property.

Your Mom would still be carrying the note just like a lender for 30 years, if you don’t file a lien (1st TD & Promissory Note) then the property would be a financial windfall and you will owe State and Federal Taxes as income for that year, roughly 50% on $130k!

Unless your Mom is deceased and this is inheritance then any change of title without recorded debt is income to you, and you will owe taxes against it and I can guarantee the IRS will come get it.


There is no tax difference between a quit claim and a warranty deed. A warranty deed is a more secure method of transferring title to ensure no other claimants on the title. A quit claim deed only transfers the property interest from that specific person regardless of the interest of any other persons on the deed or past deeds.

Personally, I find this scenario you proposed full of problems. The main one is that you are stealing property value from your sister. If I understand it clearly, you are proposing a 100% property transfer to your name with a purchase price of $130,000. You make land contract (owner financing) payments at whatever you agree.

It would not be fair to pay your sister 50% of the loan balance as a payoff. Let’s say you pay on the loan for 8 years before your mom passes. The balance would be approximately $105,700. 50% of that is only $52,850. But based on the market value at the time of the transfer, she should have gotten $70,000. I bet she will figure that out.

My recommendation. Have your mom sign the property over to you and your sister - via a warranty or QC deed. This will keep the property out of probate and/or the estate upon her death. Now, set up a land contract or promissory note between you and your sister in order to buy out her 50% share.