What's the difference between gift deed and quit claim deed?

A gift deed is used when you receive no money or compensation for the transfer. If a gift deed is used, the person receiving property by way of a gift deed must report "the gift" on their federal income tax return. A quitclaim deed is typically used to transfer ownership of co-owned property to one of the owners; but, it can be used to transfer ownership to a non-owner. Property can be transferred by a quitclaim deed whether or not a payment is received. If payment is received for the transfer of ownership, then the compensation paid for the transfer is subject to county sales tax. If you are looking to "gift" the property to someone, a quitclaim deed may be a better option since the person receiving the property will not have to report the value of the "gift" on their tax returns. If their are any liens or other encumbrances recorded on the property, the transfer by way of either gift deed or quitclaim deed will not remove those liens or other encumbrances. The person to whom you transfer the property will take title subject to those liens or other encumbrances.

A gift deed means there was no payment. You should think of seeing a tax attorney or estate planning attorney since it probably will exceed your annual gift tax exclusion. A quitclaim deed may be for money or not for money. It declares, whatever interest I have is transferred to you. It contains no warranty of title.

Gift deed will require filing of Gift tax return. No tax should be required unless you have used up your $5 Million in exemption on other gifts.

Under California law, if you execute a quit claim deed to transfer the property to your children you will need to complete a Preliminary Change of Ownership Report and give it to the clerk at the recorder's office when you record the deed. The clerk will send it to the assessor. You should also complete the form for the Assessor to claim the Parent Child Exclusion which will prevent reassessment of the property. This exclusion is limited but is available when a property is transferred from parent to child or grandparent to grandchild. If you purchased the property some time ago the consequences of not filing for the exclusion could be significant.