My mother owns a townhouse that my sister has lived in for years. My sister has paid the mortgage and taxes on it. My mom has kept the townhouse in her name because the mortgage is in her name. For all intents and purposes, it is my sister's townhouse. It will be paid off in May and my mother would like to transfer ownership of that townhouse to my sister. What is the best way for her to do this?

Put it in the will and give it to her when your mom passes. Sister gets a stepped up basis and nobody has to mess with tax implications today.

True, but sister won't get the homestead exemption in the meantime.

Very true. But the CAD is also most likely going to re-assess at market value if your mom sells or gifts it to her now, so you lose either way for that.

It depends on the value of the town house, your sister's tax bracket, and your mother's age, but my guess is the savings from the homestead exemption is much lower than the federal tax savings.

Even if her basis was zero, based on what these are selling for today, sister would be able to exclude entire gain from tax.

Mom probably doesn't WANT to have the house in her name anymore.

Red Pear Realty said:

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Put it in the will and give it to her when your mom passes. Sister gets a stepped up basis and nobody has to mess with tax implications today.

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Why mess with probate? Texas allows TOD titles.

Sure. A trust is another option.

We are looking for the most efficient, legal manner in which to transfer the title from my mother to my sister. We're not looking for tax savings, the townhouse is valued at maybe $200,000. My mother wants the house out of her name once the mortgage is paid off. How does she go about transferring the deed? Contact a title company?

If you don't want to do it yourself, just contact an attorney and have them draw up the transfer of deed. Should be real easy...

Contact a title company. No need to hire an attorney. The title company will handle everything.

Personally, I'd prefer to have a real estate attorney prepare the documents after a consultation with the parties. Money well spent.

I've seen plenty of problems when title companies alone prepare the docs. They are representing themselves and nobody else.
Edit: CW, your sister should also get title insurance, even though she's getting it from your Mom.

A simple Deed, executed by your mom, properly describing the property, notarized and filed in the county records will transfer the property.

Simple deed drawn up by an attorney won't cost much…or shouldn't.

My family lives with my grandmother in her house and 5 acres. Would she need to deed it to me before being placed in a care home?

Talk to an estate attorney and CPA before you do anything.

Utopia61 said:

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Contact a title company. No need to hire an attorney. The title company will handle everything.

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No doubt, the title company has an "in house" attorney they use to draw up the deed.