Definition of "Release"

Patti Zajack real estate agent
Patti Zajack, Real Estate Agent Better Homes & Gardens Real Estate Gary Greene

  1. to free real estate when the mortgage is paid. When a mortgage is paid in full, a release of record is typically issued confirming the retirement of the debt.
  2. the creditor's forgiveness of the debtor's obligation.
  3. Voluntarily quitting, abandoning, or giving up any further legal right against another. For example, exercising a prepayment of loan provision would release the borrower from any further obligations
 

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Comments for Release


Ereshi Rao Ereshi Rao said:

Father with 2 residential homes, wants to transfer one house to his wife/son. Will there be any capital gain tax ?

Sep 20, 2020  10:30:11

 
Real Estate Agent

Hey, Ereshi!

It’s hard to say if the wife/son will have to pay capital gain tax or not. If you live in the US and if the capital gains are above $38,600, it is most likely that there will be a capital gain tax that the wife/son will have to pay if they decide to sell the property. 

 

If, for example, the father purchased the property years ago for $70,000, and until the transfer, he put $10,000 into the home, the property can be currently valued at around $300,000. However, by transferring the house to the wife/son while he is still living, the cost basis of $80,000 would be the son/wife’s basis. The capital gain after selling the property would be the difference between the selling price and the cost basis, and that would be $220,000. For a capital gain rate of 15%, there will be a $33,000 capital gain tax paid by the seller.


However, the capital tax rate can vary from 0% to 20% based on income and marital status. At this point, the importance of making a will can have a different outcome than the one mentioned above. Why? If the son/wife inherits the property upon death instead of transferring the deed, the son/wife’s cost basis would be the property value at the time of death. In this case, if the property is sold, the wife/son will not be responsible for capital gains tax.

Sep 28, 2020  10:36:30
 
 

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