Yes, you can transfer your property to your son. The law gives you several ways to do it — through a deed, a trust, a sale, or even a transfer that takes effect after you pass away. However, how you transfer it matters more than whether you can. A wrong move can trigger capital gains taxes worth tens of thousands of dollars, make you ineligible for Medicaid for years, or even expose your home to your son’s creditors and divorce proceedings.
Under 26 U.S.C. § 2503, any transfer of property that exceeds the annual gift tax exclusion — currently $19,000 per recipient in 2026 — must be reported to the IRS on Form 709, even if no tax is owed. And under 42 U.S.C. § 1396p, transferring your home within five years of applying for Medicaid can result in a penalty period of total benefit denial. A staggering 55% of Americans have no estate planning documents at all — no will, no trust, no legal plan — which means millions of families risk making costly, irreversible mistakes with their largest asset.
Here is what you will learn in this article:
- 🏠 Every method available to transfer property to your son — and when to use each one
- 💰 How to avoid the carryover basis trap that could cost your son hundreds of thousands in capital gains taxes
- ⚖️ The Medicaid look-back rule, its exceptions, and how to protect your home without losing benefits
- 📋 Real-world scenarios with tables showing exactly what happens when you make the right — or wrong — choice
- 🛡️ Do’s, don’ts, and the most common mistakes families make when transferring property
How Property Transfers Work Under Federal Law
Before diving into specific methods, it helps to understand the federal framework that governs every property transfer between a parent and child. Two areas of law control most of the consequences: the gift tax and the income tax basis rules.
The IRS treats any transfer of property for less than full market value as a gift. In 2026, each person can give up to $19,000 per recipient per year without filing a gift tax return. A married couple can combine their exclusions to give $38,000 per recipient per year. Anything above that amount must be reported on IRS Form 709.
Reporting a gift does not mean you owe gift tax. The lifetime gift and estate tax exemption is $15 million per individual — or $30 million for married couples — as of 2026. This exemption was made permanent under the One Big Beautiful Bill Act, removing the sunset provision that would have cut it in half. You will not owe any federal gift tax unless your cumulative lifetime gifts exceed $15 million.
The real cost of gifting property during your lifetime is not the gift tax. It is the income tax basis your son receives. When you give property as a gift, your son inherits your original purchase price as his tax basis — this is called carryover basis. When property is inherited after death, the basis resets to fair market value — this is called stepped-up basis. The difference between these two outcomes can be enormous.
Carryover Basis vs. Stepped-Up Basis: The Tax Trap
This is the single most important concept in property transfers. Choosing the wrong method can cost your son hundreds of thousands of dollars in capital gains taxes.
Example — Meet Robert and his son Michael:
Robert bought his home in 1990 for $80,000. Today it is worth $500,000. Robert wants to transfer it to Michael.
| Transfer Method | Michael’s Tax Basis | If Michael Sells for $500,000 | Capital Gains Tax Owed (est. 20%) |
|---|---|---|---|
| Gift during Robert’s lifetime | $80,000 (carryover) | $420,000 taxable gain | ~$84,000 |
| Inheritance after Robert’s death | $500,000 (stepped-up) | $0 taxable gain | $0 |
That is a potential $84,000 difference based solely on when and how the transfer occurs. This is why estate planning attorneys almost always recommend keeping appreciated property in the parent’s name until death, when the step-up in basis wipes out all pre-death capital gains.
The carryover basis rule applies to all lifetime gifts — whether you use a quitclaim deed, a gift deed, or add your son to the title. Only property that passes at death (through a will, a trust, a TOD deed, or a Lady Bird deed) qualifies for the stepped-up basis.
Every Method to Transfer Property to Your Son
Quitclaim Deed
A quitclaim deed transfers whatever ownership interest you have in the property to your son. It makes no guarantees about the title — no promise that the title is clear, that there are no liens, or that you even own the property at all. It is the simplest and fastest deed to execute.
Quitclaim deeds are the most common deed used between family members because the parties trust each other and no money is changing hands. The deed must be signed, notarized, and recorded with the county recorder’s office. Some states also require a witness.
When to use it: Transfers between family members where you are certain the title is clear. Transferring property into your own revocable trust.
When to avoid it: If your son plans to get title insurance, sell the property soon, or if there is any uncertainty about liens or encumbrances.
Warranty Deed
A warranty deed goes further. The grantor guarantees that they hold clear title, that there are no hidden liens or encumbrances, and that they will defend the grantee against any future title claims. It includes the covenant of seisin, the covenant against encumbrances, and the covenant of quiet enjoyment.
This deed is standard in arm’s-length real estate sales but can also be used for family transfers. It provides your son with stronger legal protection if title problems surface later.
Revocable Living Trust
A revocable living trust is one of the most powerful estate planning tools for transferring property. You create the trust, transfer the property into it, name yourself as trustee during your lifetime, and name your son as the beneficiary.
You retain full control of the property — you can sell it, refinance it, or revoke the trust entirely. When you pass away, the property transfers to your son without going through probate, which saves time and court costs. Most importantly, property passing through a revocable trust at death qualifies for the stepped-up basis, potentially saving your son tens or hundreds of thousands of dollars in capital gains taxes.
A revocable trust does not protect assets from creditors or Medicaid spend-down requirements during your lifetime, because you retain control.
Irrevocable Trust
An irrevocable trust removes the property from your estate entirely. Once you transfer property into it, you give up the right to sell, modify, or revoke the trust without the consent of all beneficiaries. This loss of control is the trade-off for powerful protections.
The property inside an irrevocable trust is shielded from your son’s creditors, divorces, and lawsuits. A properly drafted irrevocable trust can also preserve the stepped-up basis at death, protect against estate taxes for high-net-worth families, and provide Medicaid asset protection — provided the trust is created more than five years before a Medicaid application.
An irrevocable trust created within the five-year Medicaid look-back period is treated as a disqualifying gift, which triggers a penalty period of Medicaid ineligibility.
Transfer-on-Death (TOD) Deed
A transfer-on-death deed lets you name your son as the beneficiary of your property. The deed has no effect while you are alive — you keep full ownership and control. When you die, the property transfers directly to your son without probate.
TOD deeds are available in over 30 states, including California, Texas, Colorado, Ohio, Illinois, and Virginia. They must be signed, notarized, and recorded with the county before your death. You can revoke or change a TOD deed at any time during your lifetime.
Since a TOD deed transfers property at death, your son receives the stepped-up basis, not the carryover basis. This makes TOD deeds a simple, low-cost alternative to a trust for families who want probate avoidance and tax efficiency.
Lady Bird Deed (Enhanced Life Estate Deed)
A Lady Bird deed is a special type of life estate deed that gives you full control over the property during your lifetime — including the right to sell, mortgage, or revoke the deed entirely — while naming your son as the remainder beneficiary. At your death, the property passes directly to your son without probate.
Lady Bird deeds are only recognized in five states: Florida, Michigan, Texas, Vermont, and West Virginia. They are popular in Florida because they do not trigger a Medicaid transfer penalty, do not require your son’s consent for property decisions, and do not trigger gift taxes during your lifetime.
Traditional Life Estate Deed
A traditional life estate deed gives you the right to live in the property for your lifetime, but immediately grants your son a vested remainder interest. Unlike a Lady Bird deed, you cannot sell, mortgage, or revoke the transfer without your son’s written consent.
This loss of control is a serious drawback. Your son’s creditors can attach a lien to the remainder interest, and a traditional life estate may trigger the Medicaid look-back penalty in many states. It also triggers gift tax reporting on the value of the remainder interest at the time the deed is signed.
Selling the Property to Your Son (Full or Below Market Value)
You can sell your home to your son at fair market value, below market value, or for a token amount. However, the IRS treats the difference between the sale price and the home’s fair market value as a gift.
Example — Meet Linda and her son James:
Linda’s home is worth $400,000. She sells it to James for $200,000. The $200,000 difference is a gift of equity. Linda must file IRS Form 709 to report the gift. No gift tax is owed unless Linda’s cumulative lifetime gifts exceed $15 million.
James’s tax basis in the property becomes the greater of the amount he paid or Linda’s adjusted basis. If Linda’s original basis was $100,000 and James paid $200,000, James’s basis is $200,000.
For lending purposes, the gifted equity can serve as a down payment, letting James purchase the home with little or no cash out of pocket.
If Linda lived in the home for at least two of the last five years, she may qualify for the Section 121 exclusion — up to $250,000 of gain excluded for a single filer, or $500,000 for married couples filing jointly.
The Medicaid Look-Back Rule and Your Home
Federal law under 42 U.S.C. § 1396p requires states to review all asset transfers made within the five years (60 months) before a Medicaid long-term care application. If you transferred your home to your son during this window, Medicaid will impose a penalty period of ineligibility — meaning you will not receive benefits to pay for nursing home care until the penalty expires. There is no cap on how long the penalty period can last.
One of the most common and dangerous misconceptions is that the IRS annual gift tax exclusion protects you from Medicaid penalties. It does not. The $19,000 annual gift exclusion is an IRS rule. Medicaid has its own, separate rules — and any gift of any amount during the look-back period can trigger a penalty.
Exceptions to the Medicaid Look-Back for Home Transfers
There are a few critical exceptions under 42 U.S.C. § 1396p(c)(2) that allow you to transfer your home without a penalty:
- Child under 21: You can transfer your home to a child who is under age 21.
- Disabled or blind child: You can transfer your home — or any asset — to a permanently disabled or legally blind child of any age.
- Caregiver child exception: You can transfer your home to an adult child who lived in the home for at least two years immediately before you entered a nursing home and provided care that delayed your need for institutional care.
- Sibling exception: You can transfer your home to a sibling who is a part-owner and lived in the home for at least one year before your admission.
The caregiver child exception has strict evidentiary requirements. Courts require proof of a medical diagnosis (such as Alzheimer’s), documentation that the care exceeded routine help like grocery shopping, and evidence that the care was essential to the parent’s health and safety.
State Variations
Most states use a 60-month look-back period. California is an exception — the state had a shorter 30-month look-back but is reimplementing it in 2026, and it currently only applies to Nursing Home Medicaid. New York has a 60-month look-back for nursing home Medicaid but currently has no look-back for Community Medicaid (home and community-based services).
The Due-on-Sale Clause and the Garn-St. Germain Act
If your home has a mortgage, you may worry that transferring it to your son will trigger the due-on-sale clause — a provision in nearly every mortgage that allows the lender to demand full repayment when ownership changes. The good news: federal law protects parent-to-child transfers.
The Garn-St. Germain Depository Institutions Act of 1982 (12 U.S.C. § 1701j-3) prohibits lenders from enforcing the due-on-sale clause when a parent transfers residential property to their child. This protection applies whether the transfer happens during life or at death, and it covers residential property with fewer than five dwelling units.
After the transfer, your son takes the property subject to the existing mortgage. He does not need to refinance. As long as payments continue to be made, the loan will not be in default.
Important limitations:
- The Garn-St. Germain Act does not protect child-to-parent transfers — only downward family transfers.
- It does not protect transfers of mortgaged property into an LLC or other business entity.
- It applies to residential property only, not commercial real estate.
California Proposition 19: Property Tax Reassessment
For California property owners, property tax reassessment is a major factor. California’s Proposition 13 caps annual property tax increases, keeping taxes low based on the original purchase price. But when property changes hands, it triggers reassessment to current market value — which can mean a dramatic tax increase.
Proposition 19, which took effect on February 16, 2021, narrowed the parent-child exclusion. Under the prior law (Proposition 58), parents could transfer their primary residence and up to $1 million of other real property to children without any reassessment, regardless of whether the child lived in the home.
Under Prop 19, the parent-child exclusion only applies if:
- The property is the parent’s primary residence
- The child moves in within one year and uses it as their primary residence
- The market value increase is less than $1 million above the current assessed value (adjusted annually)
Rental properties, vacation homes, and investment properties are no longer eligible for the parent-child exclusion under Prop 19. If your child does not move in and claim the home as their primary residence, the property will be reassessed to current market value — potentially multiplying the annual property tax bill.
Real-World Scenarios
Scenario 1: Parent Gifts Home Outright During Lifetime
Sandra (age 72) wants to give her $450,000 home to her son David now. She bought it in 1988 for $60,000.
| Decision | Result |
|---|---|
| Sandra signs a quitclaim deed to David | David now owns the home |
| David’s tax basis | $60,000 (carryover basis) |
| David sells the home for $450,000 | $390,000 taxable capital gain |
| Estimated capital gains tax at 20% | ~$78,000 |
| Sandra applies for Medicaid 3 years later | Transfer triggers a penalty period — Sandra is denied Medicaid benefits |
Sandra intended to simplify things. Instead, David faces a massive tax bill, and Sandra cannot get nursing home coverage.
Scenario 2: Parent Uses a Revocable Trust
Tom (age 68) creates a revocable living trust and transfers his $500,000 home into it. He names his son Alex as the successor trustee and beneficiary.
| Decision | Result |
|---|---|
| Tom retains full control during his lifetime | Can sell, refinance, or revoke |
| Tom passes away at age 82 | Property transfers to Alex without probate |
| Alex’s tax basis | $500,000 (stepped-up to fair market value at Tom’s death) |
| Alex sells the home for $510,000 | $10,000 taxable gain |
| Estimated capital gains tax | ~$2,000 |
Tom’s approach saved Alex tens of thousands of dollars and avoided probate entirely.
Scenario 3: Parent Sells Below Market Value
Maria (age 75) sells her $350,000 home to her son Carlos for $150,000.
| Decision | Result |
|---|---|
| IRS treats the $200,000 difference as a gift | Maria must file Form 709 |
| Gift tax owed | $0 (under $15M lifetime exemption) |
| Carlos’s tax basis | $150,000 (the amount he paid, assuming Maria’s basis was lower) |
| Carlos later sells for $350,000 | $200,000 taxable gain |
| Maria applies for Medicaid within 5 years | The $200,000 gift of equity triggers a Medicaid penalty |
Selling below market value is not a loophole — the IRS and Medicaid both see through it.
Risks of Adding Your Son to the Deed
Many parents think adding a child’s name to the deed is a simple solution. It is not. This is one of the riskiest moves in estate planning, and here is why.
When you add your son to the deed, he becomes a legal co-owner. He must consent to any sale, refinance, or home equity loan. If he has financial problems — creditors, tax liens, or bankruptcy — those problems now attach to your home.
If your son is married and later divorces, his spouse may claim an interest in the property as a marital asset, especially if the property was commingled with marital finances. If your son dies before you, his ownership interest could pass to his heirs — potentially leaving you co-owning your home with a daughter-in-law or grandchild you did not intend to share it with.
You also lose the stepped-up basis. When you add your son to the deed, you are gifting him a portion of the home during your lifetime, which means he receives carryover basis on that portion — not the stepped-up basis he would have received through inheritance.
If you have multiple children, adding only one to the deed can create inheritance inequities and family conflict. The child on the deed could inherit the property through survivorship rights, leaving nothing for siblings.
Mistakes to Avoid
Mistake #1: Gifting property to avoid probate without considering taxes. Probate costs are often a few thousand dollars. The capital gains tax your son may owe due to carryover basis can be tens or hundreds of thousands. A revocable trust avoids probate and preserves the stepped-up basis.
Mistake #2: Assuming the IRS gift tax exemption protects you from Medicaid. The $19,000 annual exclusion is an IRS rule, not a Medicaid rule. Any gift during the five-year look-back period can disqualify you from Medicaid long-term care.
Mistake #3: Transferring property to a son who has debt or legal issues. Once your son owns the property, it is exposed to his creditors, divorce proceedings, and lawsuits. An irrevocable trust or trust with spendthrift provisions provides far better protection.
Mistake #4: Failing to fund the trust. Creating a trust but never transferring the property into it defeats the purpose. The property must be re-titled in the trust’s name for probate avoidance and other benefits to apply.
Mistake #5: Not recording the deed. A deed that is signed but not recorded with the county may not be legally effective against third parties. Always record the deed with the county recorder’s office.
Mistake #6: Ignoring state-specific rules. California’s Proposition 19 limits the parent-child exclusion, Florida recognizes Lady Bird deeds while most states do not, and Medicaid rules vary dramatically state by state.
Mistake #7: Selling for $1 or a token amount. The IRS treats the full difference between market value and the sale price as a gift. Selling for $1 does not reduce the gift tax reporting requirement or avoid Medicaid penalties. It also leaves your son with the lowest possible tax basis.
Do’s and Don’ts
Do’s
- ✅ Do consult an estate planning attorney before any transfer. State laws vary, and the tax and Medicaid consequences depend on your specific situation.
- ✅ Do consider a revocable living trust if you want to avoid probate and preserve the stepped-up basis for your son.
- ✅ Do look into a TOD deed if your state allows it and your estate is straightforward — it is a simple, low-cost probate avoidance tool.
- ✅ Do keep records of your original purchase price, improvements, and any gift tax returns filed. Your son will need this information to calculate his tax basis.
- ✅ Do plan at least five years ahead if Medicaid is a concern. Transfers made before the look-back period are not penalized.
- ✅ Do use an irrevocable trust if you want to protect property from your son’s creditors, divorce, or lawsuits — and you are willing to give up control.
Don’ts
- ❌ Don’t add your son to the deed without understanding the gift tax, carryover basis, and creditor exposure risks.
- ❌ Don’t gift property and then apply for Medicaid within five years. The transfer will be treated as a disqualifying gift.
- ❌ Don’t assume a quitclaim deed avoids probate by itself. It only avoids probate if the transfer is completed before death — and doing so triggers carryover basis and possible Medicaid penalties.
- ❌ Don’t transfer property into an LLC if there is a mortgage — the Garn-St. Germain Act does not protect LLC transfers, and the lender can call the loan due.
- ❌ Don’t forget about property tax reassessment. In California, gifting property to a child who does not move in as their primary resident will trigger a full reassessment under Prop 19.
- ❌ Don’t rely on internet deed forms without legal review. A poorly drafted deed can create unintended co-ownership, title defects, or tax liabilities.
Pros and Cons of Each Transfer Method
| Method | Pros | Cons |
|---|---|---|
| Quitclaim Deed | Fast, simple, inexpensive; no title search required | No title guarantees; triggers carryover basis; possible Medicaid penalty |
| Warranty Deed | Title guarantees protect your son; standard for sales | More complex; title search needed; same tax issues as quitclaim if gifted |
| Revocable Trust | Avoids probate; preserves stepped-up basis; you keep full control | Costs $1,500–$3,000+ to set up; does not protect from creditors or Medicaid |
| Irrevocable Trust | Creditor and Medicaid protection; estate tax reduction; can preserve step-up | Loss of control; inflexible; must be created 5+ years before Medicaid application |
| TOD Deed | Simple; revocable; avoids probate; preserves stepped-up basis | Not available in all states; does not protect from creditors during your life |
| Lady Bird Deed | Full control retained; avoids probate; no Medicaid penalty; preserves step-up | Only available in 5 states (FL, MI, TX, VT, WV) |
| Traditional Life Estate | Avoids probate; retains right to live in home | Loss of control; may trigger Medicaid penalty; remainder interest exposed to son’s creditors |
| Sale Below Market Value | Son gets mortgage financing; partial cash to parent | Difference treated as gift; carryover/hybrid basis; Medicaid penalty risk |
Key Entities and Their Roles
Understanding who is involved in a property transfer helps you navigate the process:
- IRS (Internal Revenue Service): Enforces gift tax rules. Requires Form 709 for gifts over $19,000. Administers the lifetime exemption.
- State Medicaid Agency: Reviews all asset transfers within the look-back period. Imposes penalty periods for disqualifying transfers.
- County Recorder/Clerk: Where all deeds must be recorded to become effective against third parties.
- Mortgage Lender: Holds the due-on-sale clause but cannot enforce it for parent-to-child transfers under the Garn-St. Germain Act.
- California Board of Equalization / County Assessor: Administers Proposition 19 parent-child exclusion claims.
- Estate Planning Attorney: Drafts deeds, trusts, and advises on the tax and legal consequences of each transfer method.
- Certified Medicaid Planner: Specialists in Medicaid rules who help families structure transfers to avoid penalties.
Step-by-Step: Transferring Property via Quitclaim Deed
If you choose to use a quitclaim deed (understanding the tax and legal risks), here is the process:
- Obtain or prepare the deed form. Most county recorder offices offer standard forms. You can also hire an attorney to draft one.
- Fill in the required information. This includes the legal description of the property (found on your current deed or tax assessment), the grantor’s name (you), the grantee’s name (your son), and the date of transfer.
- Sign the deed. The grantor must sign. Most states require notarization, and some states require a witness.
- Record the deed. File the signed, notarized deed with the county recorder’s office where the property is located. Recording fees vary by county.
- File a gift tax return (if applicable). If the fair market value of the transferred interest exceeds $19,000, file IRS Form 709 by April 15 of the following year.
- Notify your mortgage lender (if applicable). Under the Garn-St. Germain Act, the lender cannot enforce the due-on-sale clause for a parent-to-child transfer, but notifying them keeps the loan in good standing.
- Update your homeowner’s insurance. The new owner should be listed on the insurance policy.
- File any required state forms. In California, file the parent-child exclusion claim with the county assessor within three years if the home qualifies under Prop 19.
Protecting Your Son’s Inheritance From Divorce
One of the biggest overlooked risks is what happens if your son is married when he receives the property. In most states, an inheritance or gift is considered separate property — but only as long as it is not commingled with marital assets.
If your son uses marital funds to pay the mortgage, make improvements, or pay property taxes on the transferred home, a court may treat part or all of the property as a marital asset. The moment the property looks and functions like marital property, it becomes vulnerable to division in a divorce.
The most effective protection is to transfer property through an irrevocable trust with spendthrift provisions. This keeps the property titled in the trust’s name — not your son’s — so it cannot be classified as marital property. Courts generally cannot divide assets that a beneficiary does not directly own or control.
If you transfer property outright, encourage your son to keep the property in his name only (not joint with his spouse), pay expenses from separate funds, and consider a postnuptial agreement that identifies the property as separate.
Relevant Court Rulings
Courts have reinforced the strict requirements for Medicaid transfer exceptions. In a notable New Jersey case, the court reiterated that the caregiver child exception under 42 U.S.C. § 1396p(c)(2)(A)(iv) requires the child to prove, with clear documentation, that they lived in the home for at least two years and provided care that exceeded normal personal support activities. Routine transportation and shopping were not enough. The parent’s physical or mental condition had to require special attention, such as medication supervision or nutritional monitoring.
In California, the court in Mejia v. Reed held that property transfers made during divorce proceedings can be challenged as fraudulent conveyances under the Uniform Fraudulent Transfer Act — reinforcing the principle that property transfers, even between family members, are not immune from creditor scrutiny.
FAQs
Can I transfer my house to my son while I’m still alive?
Yes. You can use a quitclaim deed, warranty deed, gift deed, or trust to transfer your home during your lifetime, but doing so triggers carryover basis and may affect Medicaid eligibility.
Will my son owe gift tax if I give him my house?
No, in most cases. The gift counts against your $15 million lifetime exemption, so no tax is owed unless your total lifetime gifts exceed that amount. You must still file Form 709 to report it.
Does transferring my home to my son trigger the due-on-sale clause?
No. The Garn-St. Germain Act prohibits lenders from enforcing the due-on-sale clause when a parent transfers residential property to their child.
Can I transfer my home and still live in it?
Yes. A revocable trust, Lady Bird deed, life estate deed, or TOD deed all let you retain the right to live in the home until you pass away.
Will transferring my home affect my Medicaid eligibility?
Yes, if done within five years of applying. The transfer triggers a penalty period of Medicaid ineligibility unless an exception applies, such as the caregiver child exemption.
Is a quitclaim deed the same as giving up ownership?
Yes. A quitclaim deed transfers whatever interest you have in the property to the grantee. Once signed and recorded, you no longer own the property.
Can I reverse a property transfer to my son?
No, not unilaterally. Once a deed is signed and recorded, your son must agree to transfer it back. Revocable trusts and TOD deeds can be changed, but outright deed transfers cannot.
What is the best way to transfer property to avoid taxes?
No single method avoids all taxes. A revocable trust or TOD deed provides the stepped-up basis at death, which eliminates capital gains on pre-death appreciation — the biggest tax savings for most families.
Does my son need to pay property taxes right away after the transfer?
Yes. Property taxes become your son’s responsibility once he owns the home. In California, the property may also be reassessed to current market value unless the Prop 19 exclusion applies.
Can I transfer property to my son if I still owe a mortgage?
Yes. The Garn-St. Germain Act protects parent-to-child transfers from triggering the due-on-sale clause. Your son takes the property subject to the existing mortgage.
Is a Lady Bird deed better than a trust?
Yes, in some cases. A Lady Bird deed is simpler and cheaper than a trust, but it is only available in five states: Florida, Michigan, Texas, Vermont, and West Virginia. If you live elsewhere, a trust is the better option.
Can I transfer rental property to my son tax-free?
No. In California, rental property does not qualify for the Prop 19 parent-child exclusion. The gift still requires IRS reporting, and your son receives carryover basis.