What are the tax implications of a quitclaim deed?
I would like to quitclaim a piece of property to a friend with no payment involved. Will there be taxes for either of us?
Depending on the value, you could run into gift tax issues. This typically comes into play if the property is worth more that $15,000. Also depending on the state/municipality there may be transfer tax or other taxes that will need to be paid in the process of the transfer.
There will be no income taxes at the federal or state level, however, you need to be mindful of the unified federal gift and estate tax. There is a lifetime exemption of up $11.4M for 2019. In addition, you can gift up to $15,000/year and that amount will be excluded from accruing towards your lifetime exemption amount. As long as the property you are gifting (via a quitclaim deed) doesn't put you over your lifetime limit, then your estate should be okay in terms of not having to owe any gift taxes upon your death.
In addition, there is likely to be other "taxes" like title, transfer, and recording fees. Also, depending on where you live there might be some type of local tax that is applicable. For example, the state of Florida charges a document stamp tax that is due on a mortgage, lien or other forms of indebtedness. With the tax rate being $0.35 per $100 of debt secured.
Two issues: The value and your cost basis. If the value is less than $15k ($30k if you are married and another $30k if your freind is married) then there are no gift taxes due on the federal level. When you inherit an asset you get a step up in basis at death so he could sell the land and fair market value and own nothing at tax time. However, if you gift during live via the quitclaim then their tax basis is your basis. Other than that no issues.