Parties may use Illinois gift deeds when gifting. Here’s what to know about Illinois gift deeds, forms, and requirements.
Gift deeds in Illinois require the gift giver (grantor) and the recipient (grantee) to draft a new deed over the property. Illinois gift deeds require language indicating whether payment or consideration is unnecessary. The grantor and grantee must have the deed notarized at the residence location. Lastly, grantors and grantees must record gift deeds with the Land Records in the property’s county. Grantors and grantees should speak with a professional to ensure Illinois recognizes the gift deed.
Requirements for Gift Deeds in Illinois
In Illinois, a gift deed occurs when one party gifts real property without expecting payment in return. Gift deeds are simply the transfer of property from one party to another. Individuals often use gift deeds to transfer property between family members or to gift property as a charitable act or a donation.
A deed transfers property from grantors to grantees. Grantors are current owners who are transferring the property, and grantees are the recipients of the property.
In Illinois, the deed transfer process occurs in a 4 step process:
1. Review Current Deed
Before creating a new deed with the grantors and grantees, it is important to have a current of the recent deed and review the current stipulations. You will need the legal description of this deed and the exact way the current grantor’s name was worded on the current deed.
2. Write a New Deed
Create a new deed abiding by Illinois law’s requirements:
- In writing and signed by the grantor and grantee
- A notary public must acknowledge the deed
- The deed must contain operative words showing intent to transfer titles without consideration
- Recorded in the county where the real estate is located
Failure to comply with the following could make your Illinois deed transfer void. It is important to discuss your options with a trained and experienced real estate attorney or agent before confirming your new deed.
3. Sign and Notarize the Deed
Both grantor and grantee must have their signature witnessed by a notary public, who can acknowledge the deed legally.
4. Record the Deed in Illinois Land Records
The last step to a deed transfer is to record the land transfer with the appropriate Illinois land records office. Deed drafters must pay recording costs and any Illinois real estate transfer taxes upon recording a new deed.
Gift Tax on Gift Deeds in Illinois
Illinois has no state gift tax. Gifts of real property are subject to the federal gift tax. The person gifting the deed must pay the federal fit tax. If left unpaid, the person or entity receiving the gift will pay the federal gift tax. Gifts below $15,000 do not require a federal gift tax return.
With deed gifts, the grantee does not need to declare the gift amount as income on their taxes. The grantee must pay the requisite state and federal income tax if the property occurs after the new deed is created.
You should discuss your options with a real estate agent in your area to confirm if you will be required to complete a Real Estate Transfer Declaration. Discuss your options with an experienced professional before embarking on the journey of gift deeds.