What Is the Simplest Way to Transfer My Home to My Child?

A client recently asked me a very common estate and tax planning question.

He said that if something were to happen to him, he wanted his current home to pass automatically to his daughter.

He had spoken with an attorney and was told that creating a trust could be one option. However, the cost of setting up a trust felt burdensome.

He bought the house many years ago for $160,000. Today, the house is worth about $400,000.

His question was simple.

Is there an easier and less expensive way to pass the house to his daughter?

Many parents think this way:

“If I am going to give the house to my child anyway, why not put my child’s name on the title now?”

That sounds simple.

But from a tax perspective, it can create a problem.

Let’s use this client’s numbers.

The house was purchased for $160,000.

The current value is about $400,000.

That means the house has increased in value by about $240,000.

If the father gives the house to his daughter while he is still alive, the daughter generally receives the father’s old tax basis.

This is called carryover basis.

In simple terms, if the father bought the house for $160,000 and gives it to his daughter now, the daughter’s tax basis may still be around $160,000.

If the daughter later sells the house for $400,000, she could have about $240,000 of capital gain.

The actual tax result depends on the facts.

For example, we would need to know whether the daughter lived in the house, how long she lived there, the final selling price, and whether there were capital improvements that increased the basis.

But the basic issue is this:

A lifetime gift of appreciated real estate can carry over the parent’s low basis to the child.

Now compare that with inheritance.

If the daughter receives the house after the father passes away, the tax result may be much better.

Property received by inheritance generally receives a new basis based on the fair market value on the date of death.

This is commonly called a step-up in basis.

For example, if the house is worth $450,000 on the date the father passes away, the daughter’s basis may become approximately $450,000.

If she sells the house shortly after that for $450,000, there may be little or no capital gain.

Do not rush to give an appreciated house to your child during your lifetime. First, review ways for your child to receive the house after your death.

Then the next question is:

What is the simplest way to do that?

The answer depends on the state where the house is located.

Real estate is generally controlled by the law of the state where the property is located.

For example, Georgia, Virginia, and Alabama have to be reviewed differently.

Georgia

Georgia now allows a Transfer-on-Death Deed, commonly called a TOD Deed.

Georgia’s TOD Deed law became effective on July 1, 2024.

A TOD Deed allows the homeowner to name a beneficiary who will receive the property after the homeowner dies.

During the homeowner’s lifetime, the homeowner still owns the house.

The child does not become the owner while the parent is alive.

That is very important.

The father can still live in the house.

He can still sell the house.

He can still refinance the house.

He can also change the beneficiary if he changes his mind.

The transfer happens only after death.

For this reason, a TOD Deed can be a simple and useful planning tool.

The main advantages are:

First, the parent does not give up ownership during life.

Second, the child does not receive a current gift of the house.

Third, gift tax filing issues may be reduced.

Fourth, the child may receive a step-up in basis after the parent’s death.

Fifth, the TOD Deed may help avoid or reduce probate for that property.

Therefore, if the house is located in Georgia and the cost of a trust is a concern, a TOD Deed may be worth reviewing with an attorney.

Virginia

Virginia also allows Transfer-on-Death Deeds.

Therefore, if the house is located in Virginia, a TOD Deed may also be an option.

The basic idea is similar.

The owner keeps the property during life, names a beneficiary, and the property transfers after death.

Alabama

Alabama is different.

Alabama does not generally allow Transfer-on-Death Deeds for real estate.

Therefore, if the house is located in Alabama, the homeowner cannot simply use a TOD Deed in the same way as Georgia or Virginia.

For Alabama real estate, the homeowner may need to review other options with an attorney.

One option is a simple will.

A will may be less expensive than a trust, but the property may still have to go through probate after death.

Another option is a revocable living trust.

A trust may cost more, but it can help avoid probate and provide a clearer plan for managing and transferring property.

Other options may include a life estate deed or joint ownership with right of survivorship.

However, these options must be reviewed carefully.

They can create legal, tax, creditor, Medicaid planning, and family dispute issues.

Summary

If the house is located in Georgia or Virginia, a Transfer-on-Death Deed may be one of the simplest options to review.

If the house is located in Alabama, a TOD Deed is generally not available for real estate. In that case, the homeowner should review a will, revocable living trust, life estate deed, joint ownership, or other planning options with an attorney.

But the tax principle is the same in every state.

If a parent gives appreciated real estate to a child during the parent’s lifetime, the child may receive the parent’s low basis.

If the child receives the property after the parent’s death, the child may receive a step-up in basis to the fair market value on the date of death.

In this client’s case, the house was purchased for $160,000 and is now worth about $400,000.

Because the house has appreciated significantly, gifting the house during life may create unnecessary capital gain exposure for the daughter.

It may be better to first review a method that allows the daughter to receive the house after the father’s death.

Practical Steps

The practical review should usually go in this order.

First, do not immediately add the child’s name to the deed.

Second, confirm the state where the property is located.

Third, if the property is in Georgia or Virginia, ask an attorney about a Transfer-on-Death Deed.

Fourth, if the property is in Alabama, review a will, revocable living trust, life estate deed, joint ownership, or other options with an attorney.

Fifth, even if a TOD Deed is used, consider preparing a simple will as part of the overall estate plan.

Sixth, keep records of the purchase price, closing statement, major repairs, and capital improvements.

In tax planning, the question is not simply whose name is on the title.

The more important questions are when the transfer happens and how the transfer happens.

Those two questions can make a big difference in the taxes your child may pay later.

Especially when real estate has gone up significantly in value, transferring the property after death is often more tax-efficient than gifting it during life.

Important Note for CPA Clients

A Transfer-on-Death Deed is a legal document that transfers real estate ownership at death.

A CPA can explain the tax issues related to a TOD Deed, such as the difference between a gift and an inheritance, capital gains tax, stepped-up basis, gift tax, and estate tax issues.

However, preparing the TOD Deed itself is legal work, not tax preparation work.

For that reason, the TOD Deed should be prepared by an attorney licensed in the state where the property is located.

States That Allow TOD Deeds

As of June 19, 2026, the following states allow Transfer-on-Death Deeds, also called TOD Deeds or beneficiary deeds, for real estate:

Alaska, Arizona, Arkansas, California, Colorado, Delaware, Georgia, Hawaii, Illinois, Indiana, Kansas, Maine, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

The District of Columbia also allows TOD Deeds.

Maryland requires caution.

Maryland passed HB 738, and the governor approved it on May 26, 2026.

However, the effective date of the law is October 1, 2026.

Therefore, as of June 19, 2026, TOD Deeds are not yet in effect in Maryland. It is more accurate to say that Maryland is scheduled to allow TOD Deeds beginning October 1, 2026.