- Quitclaim deeds only convey the grantor's rights or interest, if any, in the property. There is no warranty or guarantee of ownership and the grantor's rights or interests in the property are not definitively stated. Quitclaim deeds are in direct contrast to the more common general warranty deeds which come with multiple guarantees, such as the right to convey the property and protection against all defects of title.
Property Tax Benefits
- When an individual quitclaims a deed to another person, he is no longer responsible for paying the annual property taxes for that property. The person who obtains the quitclaim deed is now responsible for the property taxes.
Federal Tax Benefits
- If an individual, known as a grantor or donor, quitclaims a deed without taking any money for the deed, the transfer is considered a gift. If the gift--the amount the property is worth--is less than $13,000, the federal per year per person gift limit, the grantor will be exempt and not have to pay tax on the gift.
Other Federal Exemptions
- Alternatively, if the gift is more than $13,000, the grantor may still be exempt from paying tax through the federal lifetime exception, which is up to $1,000,000. Thus, if the property is worth more than $13,000, as long as the grantor has not given gifts worth up to $1,000,000 and the value of the property is less than $1,000,000, the grantor will not have to pay federal tax on the gift (the property). Once an individual gives one gift or multiple gifts totaling $1,000,000, she has to pay taxes on the gift unless it's under $13,000.
- A quitclaim deed only transfers the grantor's interests or rights; it does not necessarily free the grantor of any liens associated with the property. For example, if a husband and wife jointly own a home, and at divorce the husband quitclaims his rights to the home to the wife, the husband will no longer have interest in the property. Meaning, if the wife runs out and sells the property, the husband is not entitled to any money gained from the sale. However, if the wife defaulted on the mortgage for the home, the husband would still be financially responsible for it as the quitclaim deed did not remove his name and obligation from the loan but instead only removed his rights to the property.