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 part of the property included in your gross estate generally takes a step-up in basis to date-of-death value (IRC §1014(a) and (b)(9)), so appreciation up to that date generally exits the income-tax system. Exceptions: appreciated property you received as a gift within a year of death that passes back to the donor or the donor’s spouse keeps your old basis (§1014(e)), and a co-owned house steps up only the part included in your estate; for spouses in community property states, the survivor’s half can step up too (§1014(b)(6)). And the property remains in your estate for estate-tax purposes, which for the overwhelming majority of households under the federal exemption costs nothing.
Which states let you name a beneficiary on a brokerage account or a vehicle title is laid out state by state: transfer-on-death registration, state by state.
If the tax treatment is what you were checking
Considering a transfer on death deed for your property? Check that LawDepot offers the right deed for your property’s state before buying, then follow your state’s signing and county recording requirements.
Create a transfer on death deed
LawDepot pays us a commission if you buy through this link — it costs you nothing extra. We are not a law firm and this is not legal advice. Affiliate Disclosure.
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.