Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
Guides › Transfer-on-Death Deeds
Updated July 31, 2026. Quick answer: the TOD deed’s tax profile is its best feature, and it is three sentences long. Recording one is not a taxable gift — the transfer is revocable, so nothing complete has been given. At your death the beneficiary takes a full step-up in basis to date-of-death value (IRC §1014) — decades of appreciation exit the income-tax system. And the property remains in your estate for estate-tax purposes, which for the overwhelming majority of households under the federal exemption costs nothing.
If the tax treatment is what you were checking
A transfer on death deed is not a completed gift, and the heir still takes a full step-up in basis — the advantage over adding someone to the title today. Where your state offers the deed, LawDepot builds one.
Create a transfer on death deed
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What the step-up is worth
A house bought for $100,000 and worth $600,000 at death passes with a $600,000 basis — the beneficiary who sells promptly reports roughly zero gain. Compare gifting the house outright during life: the child takes YOUR $100,000 basis (§1015) and a later sale realizes ~$500,000 of gain. The dollars, computed on your numbers: the inherited home sale capital gains guide. This is also why the TOD deed beats joint tenancy with a child, which forfeits the step-up on the gifted half.
The two taxes people forget to ask about
Property-tax reassessment: recording a TOD deed generally changes nothing while you live (no ownership change occurred) — but at death, whether the beneficiary inherits your assessment or triggers reassessment is a state-by-state question with real dollars attached, and parent-child transfer rules vary sharply. State estate or inheritance tax: a TOD deed does not remove the property from either — nonprobate is not nontaxable. Where those taxes exist and bite: estate tax by state and the estate tax calculator.