Deed a House Into a Living Trust: Mortgage, Tax, 16 States

What the deed actually does

A deed into a living trust is a conveyance from you, as an individual, to you or someone you name, as trustee of a trust you created. Nothing is sold and no money changes hands. Three legal systems then look at the same house and ask different questions: the lender asks whether a transfer happened, the county assessor asks whether ownership changed, and the IRS asks who the owner is. The answers in the sections below are different on purpose, and they are different again if the trust is irrevocable.

This page is about a revocable trust the owner creates for himself or herself. It does not cover a transfer on death deed, which our transfer on death deed by state table reads state by state, or the Florida enhanced life estate deed, which has its own page on the Lady Bird deed.

The mortgage: what 12 U.S.C. 1701j-3(d)(8) says, and what it does not

Most home and investor loans carry a due-on-sale clause. The Garn-St Germain Act, 12 U.S.C. 1701j-3, lets a lender enforce it, and subsection (b)(2) says the exercise of the option “shall be exclusively governed by the terms of the loan contract” except as subsection (d) provides. Subsection (d) is the list of exceptions. It applies to a loan “secured by a lien on residential real property containing less than five dwelling units,” and says the lender “may not exercise its option pursuant to a due-on-sale clause upon” nine listed events. Item (8) is the one for trusts: “a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.”

Read the words that are there and the ones that are not (our reading):

• “Is and remains a beneficiary.” The borrower must stay a beneficiary. A deed into a trust where a child is the only beneficiary is outside the item.
• “Does not relate to a transfer of rights of occupancy.” The test is whether occupancy rights move to someone else. The statute does not say the borrower must live in the property.
• “Less than five dwelling units.” A four-unit building is inside subsection (d); a five-unit building is not.

The regulation is narrower. 12 CFR 191.5(b) applies “With respect to any loan on the security of a home occupied or to be occupied by the borrower,” and its trust item, 191.5(b)(1)(vi), covers “A transfer into an inter vivos trust in which the borrower is and remains the beneficiary and occupant of the property,” unless the borrower refuses, as a condition precedent, to give the lender reasonable means of “timely notice of any subsequent transfer of the beneficial interest or change in occupancy.” Paragraph (b)(5) adds that a lender’s right to enforce the clause is not restricted “upon the subsequent occurrence of any event which disqualifies a transfer for a previously-applicable exception.”

What this means for a rental (our reading). For an owner-occupied home with a conventional loan, federal law and Fannie Mae’s servicing rules line up: a deed into your own revocable trust, with you as beneficiary and nobody else getting occupancy rights, is a protected transfer. For a one-to-four-unit rental, the statute’s text covers it, the regulation’s text is aimed at an occupied home, and Fannie Mae’s servicing guide lists the transfer without an occupancy condition for the trust item. We found no official text that tells a borrower which of these a court would follow if a lender objected. For a DSCR or other investor loan that Fannie Mae does not own, the contract and the lender’s written consent decide, because subsection (b)(2) leaves everything outside subsection (d) to the loan contract. A building of five or more units is outside subsection (d) entirely.

The practical split is between closing a new loan in the trust and deeding after closing. Fannie Mae’s Selling Guide accepts a revocable trust as the borrower and its text says all property and occupancy types are eligible; the eLEND matrix we read allows it for a DSCR loan and excludes irrevocable and land trusts. Our own pages cover the entity side of investor loans: DSCR loans in an LLC, what a DSCR loan is and DSCR loan requirements, and the LLC for a rental property explains why a deed into an LLC is a different transfer from a deed into your own trust.

Property tax: California, Texas and Florida

California: section 62(d), Proposition 19 and what happens at death

California’s Revenue and Taxation Code section 62(d) says a “change in ownership shall not include” any transfer “by the trustor, or by the trustor’s spouse or registered domestic partner, or by both, into a trust for so long as (1) the transferor is the present beneficiary of the trust, or (2) the trust is revocable.” A deed into your own revocable trust therefore does not reassess the property. The exclusion is conditional: it holds “for so long as” one of the two conditions holds (our reading), so a trust that becomes irrevocable at death is a different case.

At that point Proposition 19’s statute, section 63.2, applies if the property qualifies. It excludes a transfer between parents and children of “the principal residence of an eligible transferor” or of a family farm if the transferee makes it his or her principal residence within one year and files for the homeowners’ or disabled veterans’ exemption within a year. The new taxable value is the old taxable value plus, where fair market value is at or above that value plus “one million dollars ($1,000,000),” the excess (section 63.2(d)). Section 63.2(e)(9) says a transfer includes “any transfer of the present beneficial ownership of property from an eligible transferor to an eligible transferee through the medium of an inter vivos or testamentary trust,” so holding the home in a revocable trust does not defeat the exclusion. The exclusion does not reach a rental: it is limited to a principal residence or family farm (our reading of section 63.2(a)), and the trustee must file a change in ownership statement within 150 days after the date of death (section 480(b)). Our California transfer on death deed page walks through the value-cap amounts; our California 1031 clawback guide covers the exchange side.

Texas: the “qualifying trust” and the residence homestead

Texas Tax Code section 11.13(j)(1)(A) defines a residence homestead as a structure “owned by one or more individuals, either directly or through a beneficial interest in a qualifying trust.” A qualifying trust (section 11.13(j)(3)) is one whose instrument gives the trustor or a beneficiary the right to use and occupy the home as a principal residence “rent free and without charge except for taxes and other costs and expenses” for life, for a term, or “until the date the trust is revoked or terminated” by a recorded instrument, and “that acquires the property in an instrument of title or under a court order” that describes the property and is “recorded in the real property records of the county.” The text puts two duties on the paper: the trust must say the occupancy right exists, and the deed must be recorded (our reading). A trust that does not say it, or a deed that is not recorded, does not meet the definition.

Florida: “beneficial title in equity”

Florida Statutes section 196.031(1)(a) gives the homestead exemption to a person who, on January 1, “has the legal title or beneficial title in equity to real property in this state” and makes it a permanent residence. A beneficiary of a revocable trust holding the house has beneficial title (our reading); the statute also requires that “the deed or instrument shall be recorded in the official records of the county.” Florida adds a document-stamp tax: section 201.02(1)(a) taxes deeds on “the consideration,” and says consideration includes “the amount of any mortgage, purchase money mortgage lien, or other encumbrance, whether or not the underlying indebtedness is assumed.” Whether a deed into your own trust on a mortgaged house owes that tax is a question for the Department of Revenue’s rule, which we did not read: not verified.

Income tax: you are still the owner

Grantor trust. 26 U.S.C. 676(a) says the grantor “shall be treated as the owner of any portion of a trust, whether or not he is treated as such owner under any other provision of this part, where at any time the power to revest in the grantor title to such portion is exercisable by the grantor or a non-adverse party, or both.” A trust you can revoke fits that sentence. Under 26 CFR 1.671-3(a)(1) the owner of the entire trust “takes into account in computing his income tax liability all items of income, deduction, and credit (including capital gains and losses) to which he would have been entitled had the trust not been in existence.” So rent, depreciation, mortgage interest and gain stay on your Schedule E and your Form 1040 (our reading). Our rental income tax guide covers those forms.

Filing. The regulation lets the trustee skip a separate trust return for a trust all of which one grantor owns. Under 26 CFR 1.671-4(b)(2)(ii)(B), where the grantor’s name and number are given to payors, “The trustee is not required to file any type of return with the Internal Revenue Service.” The method is optional (the trustee “may, but is not required to” use it), and the trust has other choices (our reading).

Selling a home from the trust. 26 CFR 1.121-1(c)(3)(i) says that when a trust owns a residence, a taxpayer treated as its owner under sections 671 through 679 is treated as owning it for the 2-year test “and the sale or exchange by the trust will be treated as if made by the taxpayer.” The 26 U.S.C. 121 exclusion (2 years of ownership and use in the 5 years before the sale) therefore passes through (our reading). Our home-sale exclusion page has the dollar limits.

1031 exchange. 26 U.S.C. 1031(a)(1) defers gain on an exchange of “real property held for productive use in a trade or business or for investment.” Because 26 CFR 1.671-3(a)(1) treats the grantor as having the trust’s items, a revocable trust that sells a rental and buys the replacement stands in the grantor’s shoes for income tax (our reading). We did not find an official text, other than those two provisions, that applies the section to a revocable trust by name; the IRS has addressed the point in private letter rulings that we did not read. The exchange rules and deadlines are in our 1031 exchange guide. Whether the title on the relinquished and replacement properties matches is a point to put to the qualified intermediary and the attorney before closing.

At death. 26 U.S.C. 1014(b)(2) treats as acquired from the decedent “Property transferred by the decedent during his lifetime in trust to pay the income for life to or on the order or direction of the decedent, with the right reserved to the decedent at all times before his death to revoke the trust.” Paragraph (3) does the same where the decedent could “make any change in the enjoyment thereof through the exercise of a power to alter, amend, or terminate the trust.” The estate-tax counterpart, 26 U.S.C. 2038(a)(1), reaches property where enjoyment was subject at death to a change through a power “to alter, amend, revoke, or terminate.” The heir’s basis is the value at death; the trust neither adds a step-up nor loses one. The step-up in basis guide explains what happens with irrevocable trusts, where Rev. Rul. 2023-2 reaches the opposite result.

What a living trust does not do

It does not put the house out of reach of your creditors. The state codes we could read say the same thing in nearly the same words:

Florida’s clause matters for a homestead: because the property is reachable only “to the extent the property would not otherwise be exempt by law if owned directly by the settlor,” an exemption you had before the deed is not lost by it (our reading). A rental has no such exemption.

It does not avoid the Medicaid look-back if the trust is irrevocable. 42 U.S.C. 1396p(d)(3)(A)(i) treats “the corpus of the trust” of a revocable trust as “resources available to the individual,” so a revocable trust does not shelter the house for eligibility. For an irrevocable trust, any portion from which no payment could be made to the individual is treated as an asset “disposed” of by the individual as of the date the trust was established (section 1396p(d)(3)(B)(ii)), and the look-back date is “60 months” before the application date for such a disposal (section 1396p(c)(1)(B)(i)). The home-equity cap in section 1396p(f)(1)(A) is “$500,000,” indexed from 2011 under (f)(1)(C), and a state may elect an amount up to $750,000 before indexing. For recovery after death, the federal text says a state’s estate “may include, at the option of the State” assets conveyed to an heir through a “living trust, or other arrangement” (section 1396p(b)(4)(B)). Whether your state uses that option is in our transfer on death deed table, state by state.

It does not lower the estate tax. Revocable trust property is in the gross estate under 26 U.S.C. 2038(a)(1), and 26 U.S.C. 2036(a) reaches property where the decedent kept “the possession or enjoyment of, or the right to the income from, the property.”

It does not move a house that the deed leaves out. A deed into the trust works only for the property it names. A house left out of the trust is a probate asset, and a trust that is signed but never funded does nothing for it (our reading).

16 jurisdictions: trust statute, creditor rule and transfer-tax exclusion

The 15 most populous states are ranked by the 2020 Census apportionment population (U.S. Census Bureau Table 1: California 39,576,757; Texas 29,183,290; Florida 21,570,527; New York 20,215,751; Pennsylvania 13,011,844; Illinois 12,822,739; Ohio 11,808,848; Georgia 10,725,274; North Carolina 10,453,948; Michigan 10,084,442; New Jersey 9,294,493; Virginia 8,654,542; Washington 7,715,946; Arizona 7,158,923; Massachusetts 7,033,469), plus the District of Columbia. The Uniform Law Commission’s enactment map of the Uniform Trust Code is an interactive Power BI report that we could not read as text, so the “uniform act” column states only what the state’s own code calls itself. “Not verified” means the official site could not be opened from our network on October 13, 2026 or the text was not read; it is not a statement that the state has no such rule.

What the table does show (our reading): where we could read the text, the exclusions share a pattern. They apply to a deed without consideration to a revocable trust of which the transferor is the beneficiary, and they say so in the statute or in the revenue department’s rule, not in a general gift exemption. A deed that carries consideration, or a mortgage that the statute counts as consideration (Florida’s section 201.02), is a different case. A deed into a trust also carries recording fees and, in several states, a form to file with the county, which the table does not cover.

Who gains from the deed, and who does not

The documents are the hard part. The deed must name the trustee correctly, the trust instrument must give the trustee the powers a lender and a title company expect (Fannie Mae’s guide requires that “The trustee(s) must have the power to mortgage the security property”), and in Texas and Florida the deed must be recorded to keep the homestead exemption (statutes quoted above). These are drafting questions for an estate-planning attorney, not a form: the deed and the trust documents need a lawyer licensed in the state where the property sits.

What an owner can do with this

• Read the due-on-sale clause in your own note and deed of trust and note whether it names trusts. The statute lets the contract govern outside the nine listed events (12 U.S.C. 1701j-3(b)(2)).
• Ask the servicer, in writing, before recording, whether it treats a deed into your revocable trust as an exempt transfer (Fannie Mae’s servicing guide does for loans it owns). Ask who owns the loan.
• For a rental, ask the lender for consent or a trust rider, and ask whether the title policy needs an endorsement for the trustee (Fannie Mae’s selling guide requires full coverage without trust exceptions for loans it buys).
• Check the county’s rule for the deed itself: the transfer-tax exclusion where one exists, and the change-in-ownership filing in California.
• In Texas, check that the trust instrument gives the occupancy right and that the deed is recorded; in Florida, that the deed is recorded (Florida Statutes 196.031(1)(a)).
• Keep a list of what the trust holds. A property left out of the trust is not covered by it.
• Ask the attorney about the 1031 exchange and the title match before a sale, and whether a successor trustee can complete an exchange.

The match above is with fee-only or fee-based advisers; it does not replace the estate-planning attorney who drafts the deed and the trust. We may earn a referral fee if you complete the questionnaire.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

Sources, read and saved on October 13, 2026: 12 U.S.C. 1701j-3, 26 U.S.C. 121, 671 to 677, 1014, 1031, 2036 and 2038 and 42 U.S.C. 1396p (United States Code, 2024 edition, Government Publishing Office); 12 CFR 191.5 and 26 CFR 1.121-1, 1.671-2, 1.671-3 and 1.671-4 (eCFR, current to October 1, 2026); Fannie Mae Selling Guide B2-2-05 and Servicing Guide D1-4.1-02 (08/13/2025); the eLEND DSCR program matrix (header revised 9/16/2026); California Legislative Information (Revenue and Taxation Code 60, 62, 63.2, 480 and 11930; Probate Code 18200); Texas Constitution and Statutes (Tax Code 11.13, Property Code 112.035); the Florida Statutes (196.031, 201.02, 732.4015, 736.0101, 736.0505); New York Senate Open Legislation (Tax Law 1405); the Pennsylvania Code (Pennsylvania Code title 61, sections 91.156 and 91.193); Virginia Code (58.1-811, 64.2-700, 64.2-747); the Washington Administrative Code (458-61A-211) and the Revised Code of Washington chapter 11.98; Arizona Revised Statutes (11-1134, 14-10101, 14-10505); the District of Columbia Code (19-1301.01, 19-1305.05, 42-1102, 47-902); and the U.S. Census Bureau 2020 apportionment Table 1 with the ranking script. The Uniform Law Commission’s enactment map could not be read as text. Interpretations are marked “our reading.” This is analysis of public documents, not investment, legal or tax advice.