ArcaMax

Q: I purchased a home in the name of a limited liability company (LLC). I paid off the mortgage on that property around 10 years ago, but the lender never sent me a deed under my name. I now want to put the property under my son’s name. What should I do?

A: First of all, we need to clarify a couple of things for you. When you purchased the property in the name of the LLC, the LLC became the owner of the property. You are likely the manager of the LLC that owns the property. The LLC took out the mortgage and the lender took the home as collateral for the repayment of the debt.

In other words, the seller of the home transferred title to your LLC. You, on behalf of the LLC, gave a mortgage or deed of trust to your lender. Around 10 years ago, you paid off the loan in full and the lender should have recorded or filed a release of mortgage or release of the deed of trust with the local real estate land record’s office.

In either situation, the release from the lender would have only dealt with the loan and not with the ownership of the property. Your LLC was and should still be the owner of the property, and the only difference is that you no longer owe money to the lender.

Did the lender send you a copy of the document that released the mortgage or deed of trust? If the lender sent the release document to you directly without recording or filing it, you’d then need to take the next step and record or file it yourself. Usually lenders send these releases directly to the land record’s office for recording or filing. If your local recorder of deeds’ office has an online system, you can look up your property using the tax parcel or identification number. Once you’re in the system, you can look for a document recorded around 10 years ago showing that the loan was released.

Once you determine the loan was released, you’ll have that information for your records. Then, you can proceed to transfer ownership of the property to your son through your LLC.

The best thing to do is to hire someone to assist with this process. You’ll want to talk with your attorney and accountant or tax advisor to fully understand what that transfer means to you and how it will affect your federal and state income tax returns. You should also ask how this transfer will affect your son’s taxes now and going forward if in the future he decides to sell the property.

Here’s something else to think about: Did you treat that property as an investment? If so, what income did you record and which expenses did you deduct for the years you owned the property? If you transfer the home to your son without payment, you may have tax issues that come about from that transfer.

If you want your son to have the property in the future, as opposed to right now, you should talk with an estate attorney to explore your options. You can simply transfer ownership, but you (and he) might save on taxes if he inherits the property after you die. If he wants to live in the home as his primary residence, there are other ways you can transfer ownership without setting either of you up for a taxable event. The estate attorney can discuss your goals for the property and then work with you to put them in place.

Just know that if you give him the home outright, you’ll need to file a federal gift tax return. You won’t owe any federal income taxes on the gift, but it might affect your estate down the line. Knowing where the potholes are is the key to avoiding them.

========

(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, a financial wellness technology company. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through her website, ThinkGlink.com.)

©2025 Ilyce R. Glink and Samuel J. Tamkin. Distributed by Tribune Content Agency, LLC.