You might have several reasons for gifting property to a family member, like helping one of your children or grandchildren onto the property ladder, wanting to pass on the family home while you’re around to see it, or planning for Inheritance Tax (IHT).
Gifting property is legal and common, but there are tax rules and legal implications for both the giver and recipient to be aware of.
This guide explores who you can gift to, how tax works for both sides, your options, the steps and the potential pitfalls of gifting your property to a family member.
If you plan to gift your property, you need to be aware that IHT and Capital Gains Tax (CGT) apply across the UK. Depending on where you live, you may be required to pay Stamp Duty Land Tax (SDLT) in England and Northern Ireland, Land Transaction Tax (LTT) in Wales, or Land and Buildings Transaction Tax in Scotland. The transfer process outlined in this guide is for England and Wales.
Already decided to gift outright? Read our deed of gift guide for insight into the document and process.
What’s in this guide?
- Can You Gift Property to a Family Member in the UK?
- Gifting Property to Family Members: How the Rules Change by Relationship
- How Tax Works When Gifting Property to Family
- What Gifting Property Means for the Family Member Receiving It
- Your Options for Passing Property to Family
- How to Gift a Property to a Family Member: Step by Step
- Things to Consider Before Gifting Your Property to a Family Member
- Gift Now or Leave It in Your Will?
- Thinking About Gifting Property to a Family Member? We Can Help
- Gifting Property to a Family Member: FAQs
Can You Gift Property to a Family Member in the UK?
Yes, as long as these conditions are met:
- You must be the registered legal owner of the home.
- Any co-owner must agree.
- Your mortgage lender (if you have one) must consent.
- The recipient of the property must be 18 or older to hold the legal title.
Gifting Property to Family Members: How the Rules Change by Relationship
The relationship you have with the intended recipient decides how the tax treats the gift.
| Family member | Inheritance Tax | Capital Gains Tax | Watch out for |
| Spouses or civil partner | Usually exempt | Nothing to pay immediately | Limits apply if your spouse isn’t a long-term UK resident |
| Child aged 18 or over | Seven-year rule applies | Due if it isn’t your main home | Losing the residence nil-rate band |
| Child under 18 | Seven-year rule applies | Due if it isn’t your main home | Must be held in a trust |
| Grandchild | Seven-year rule applies | Due if it isn’t your main home | Under-18s need a trust |
| Sibling or parent | Seven-year rule applies | Due if it isn’t your main home | No residence nil-rate band |
| Unmarried partner | Seven-year rule applies | Due if it isn’t your main home | No spouse exemption |
Your spouse or civil partner
Gifts between spouses are usually exempt from IHT, but limits apply if your spouse isn’t a long-term UK resident.
Transfers between spouses who live together are on a ‘no gain, no loss’ basis for CGT, so there’s no immediate bill.
It’s common for couples to do this for estate planning purposes or after marriage to add a spouse to a property’s title.
If you’re adding your spouse as a co-owner, you’ll need to choose whether to own the property as joint tenants or tenants in common.
For more information, read our ‘Tenancy in Common vs Joint Tenancy: What’s the Difference?‘ guide.
Adult children and stepchildren
If you’re wondering whether you can give your house to your children, you can. The gift counts as a potentially exempt transfer, so no IHT is due if you live for seven years after making it.
CGT may be due if it isn’t your main home, and giving away your own home can cost your estate the residence nil-rate band, which we explain below.
Children under 18
Children under 18 can’t hold a legal title, so a property gifted to them goes into a trust until they turn 18.
If a parent gifts a property to their own child and it produces an income, e.g. through rent, the income may be taxed as the parent’s above a small limit.
Before gifting property to a child below the age of 18, we recommend you seek specialist guidance to understand the related tax implications and costs.
Grandchildren
When gifting a property to your grandchildren, the same seven-year IHT rule applies as it does for gifting property to children.
Grandchildren also count as direct descendants, so the residence nil-rate band (currently up to £175,000) can apply.
The same rules also apply to grandchildren below the age of 18 as they do for children under 18. So, if you want to gift your property to a grandchild aged 16, for example, it’ll be kept in a trust until they turn 18.
Siblings, parents and unmarried partners
Property gifts involving these parties are potentially exempt transfers. Unmarried partners, even long-term ones, do not qualify for IHT spousal exemption, so a gift to an unmarried partner is treated like a gift to anyone else, and the seven-year rule applies.
Similarly, the residence nil-rate band doesn’t apply to siblings or parents, because it’s for direct descendants (e.g. kids and grandkids) only.
If you want to gift a second home, CGT applies as normal.
How Tax Works When Gifting Property to Family
The main taxes that can apply when gifting a property are IHT, CGT, Income Tax and SDLT (LTT in Wales), and these can be charged at different times.
| Type of tax | Who pays | When it applies | How to reduce the risk |
| Inheritance Tax | Usually the recipient, sometimes your estate | If you die within seven years and your gifts and estate exceed the tax-free threshold | Gift early, and don’t keep living in the home rent-free |
| Capital Gains Tax | You, the giver | When the property isn’t your main home and has risen in value | Get a valuation and take advice on timing |
| Stamp Duty Land Tax/Land Transaction Tax | The recipient | When they take on a mortgage as part of the gift | Clear or restructure the mortgage first |
| Income Tax | Whoever receives the rent | If the property is let, or you pay rent to stay | Factor it into the family’s budget |
Inheritance Tax and the seven-year rule
A gift of property to a family member is a ‘potentially exempt transfer’. If you live for seven years after making it, no IHT is due on it at all. See the full rules on giving gifts and IHT on GOV.UK.
If you die within seven years, the gift is added back into your estate. Each person can currently pass on £325,000 tax-free (the ‘nil-rate band’) – anything above that is taxed at up to 40%.
If you die between three and seven years after the gift, ‘taper relief’ reduces the tax on the part of the gift above the threshold:
| Years between gift and death | Rate of tax on the gift |
| 0-3 years | 40% |
| 3-4 years | 32% |
| 4-5 years | 24% |
| 5-6 years | 16% |
| 6-7 years | 8% |
Living in a home you’ve gifted: gift with reservation of benefit
If you give your home away but carry on living in it rent-free, HMRC treats it as though you never gave it away. This is known as a ‘gift with reservation of benefit’, and it means the home stays in your estate for IHT purposes however long you live. Paying your family member full market rent avoids this, although the rent is taxable income for them
The residence nil-rate band: a hidden cost of gifting your home
On top of the standard nil-rate band, your estate can claim an extra allowance of up to £175,000 when your home passes to your children or grandchildren on your death, known as the residence nil-rate band.
If you’ve already given your home away, e.g. through a deed of gift, then it isn’t in your estate to pass on, so your estate may lose this allowance.
For married couples, this could mean losing up to £350,000 of tax-free allowance, which could be worth more than the tax your gift was meant to save.
There are downsizing rules that can sometimes protect the allowance, so get specialist tax advice before you act – learn more in HM Revenue & Customs’ ‘Work out and apply the residence nil rate band for Inheritance Tax‘ guide.
Capital Gains Tax
Even though no money changes hands, HMRC treats a gift of property as if you’d sold it at its full market value. If your property has gone up in value since you bought it, that gain might be taxable.
- Your main home is usually covered by Private Residence Relief, so there’s normally no CGT to pay.
- Second homes, holiday homes and buy-to-lets aren’t covered, so CGT is likely to be due.
- Even though it’s a gift, you must report and pay CGT on a residential property within 60 days of the transfer. Read how to report and pay it on GOV.UK.
Gifting into certain types of trusts can let you defer Capital Gains Tax through holdover relief, but this may trigger other tax charges, so it’s best to get advice from a tax expert before deciding what to do.
Stamp Duty Land Tax
A straightforward property gift, with no money or mortgage involved, has no Stamp Duty to pay.
If your family member takes over a mortgage as part of the gift, HMRC treats the debt they take on as the price paid, so Stamp Duty may be due on it.
If the recipient of the gift already owns another property, higher rates may apply.
Read our guide for everything homebuyers need to know about Stamp Duty.
What Gifting Property Means for the Family Member Receiving It
Most advice focuses on the person giving the property. But a gifted home comes with responsibilities and knock-on effects for the person receiving it too, so talk these through together before anything is signed.
They’ll lose their first-time buyer status. Owning, or even part-owning, a home means they’re no longer a first-time buyer. That rules out first-time buyer Stamp Duty relief and using a Lifetime ISA if they buy somewhere else later. If they’re saving to buy their own place, that could cost them thousands. Our guide to first-time buyer conveyancing explains what they’d be giving up.
The family member may pay CGT when they sell. If the property doesn’t become their main home, they could owe CGT on any rise in value. That’s measured from the property’s value on the day you gifted it, so keep a copy of the valuation.
Similarly, if you pass away within seven years of gifting the property to your family member, they may face an IHT bill.
Your family member should also factor in the running costs of the property. This includes paying council tax, buildings insurance and maintenance, plus Income Tax if they let the property out.
Their own circumstances can put the home at risk. For example, if they divorce, go bankrupt or run into serious debt, the property can be drawn into those proceedings. A deed of trust or a prenuptial agreement can help protect the family’s intentions.
Read ‘What is a deed/declaration of trust for property?‘ to learn more about how this works.
Before you decide to gift property to a family member, you should both consider the following things:
- Whether they’ll live in it, let it out or sell it
- Whether they plan to buy their own home soon
- How the home would be protected if they marry or divorce
- Whether they can afford the running costs and any mortgage
- How the gift affects other family members
Your Options for Passing Property to Family
Gifting the whole property outright isn’t the only way to gift a property to a family member. Depending on what you want to achieve, one of these routes may suit your family better.
| Option | How it works | Best for | Watch out for |
| Outright gift | You transfer the whole property, usually using a deed of gift | Passing on a home you no longer need | Loss of control, Capital Gains Tax on second homes, the residence nil-rate band |
| Gift a share | You transfer part of the property and stay a co-owner | Bringing a child or partner onto the title gradually | Living there can still count as a reservation of benefit |
| Sell at an undervalue | Your family member pays less than market value | Recovering some money while helping them | The discount is still treated as a gift |
| Put it into a trust | Trustees hold the property for your family member | Under-18s, or keeping some control | Can trigger an immediate IHT charge. Needs specialist advice. |
| Gift cash for a deposit | You give money towards their own purchase instead | Helping a first-time buyer | Needs a gifted deposit letter for their lender |
| Leave it in your will | Your family inherits it on your death | Keeping control, and avoiding Capital Gains Tax on gains | IHT may be due if your estate is over the thresholds |
Selling for £1 or below market value
You can sell your home to a family member for £1, but HMRC treats the difference between the price and the market value as a gift. The seven-year rule and CGT still apply. Stamp Duty is worked out on the price actually paid.
Gifting a share
Giving away part of your home means you’ll own it together. You’ll need to decide whether to own it as joint tenants or tenants in common, which affects what happens to each share when one of you dies.
How to Gift a Property to a Family Member: Step by Step
Gifting a property to a family member follows a clear process. Most of the legal work is handled by your conveyancer, but it helps to know what’s coming.
- Get advice first – speak to a tax or financial adviser about the tax impact, and to a conveyancer about the legal transfer.
- Check the ownership and any mortgage – confirm who’s on the title deeds. Get agreement from any co-owner, and consent from your lender if there’s a mortgage.
- Get a formal valuation – you’ll need the market value for CGT and for your family’s IHT records.
- Decide how to structure it – choose whether you’re gifting the whole property or a share, and whether it goes straight to your family member or into a trust.
- Prepare the transfer documents – your conveyancer drafts the transfer, often alongside a deed of gift.
- Sign and witness – the documents must be signed in front of an independent witness.
- Register the change with HM Land Registry – your conveyancer submits the transfer so your family member is recorded as the new owner.
- Report any tax – report and pay any CGT within 60 days, and submit a Stamp Duty return if one is needed.
- Keep records and update your will – write down the date, value and recipient of the gift for your executors, and update your will and insurance.
Need help with the legal transfer? Speak to our team about transferring a property to a family member.
Things to Consider Before Gifting Your Property to a Family Member
A gift of property is very hard to undo, so you need to consider how it could play out for your whole family, not just the person receiving it.
- Fairness between children – gifting a home to one child can cause tension with their brothers and sisters. Some parents balance it out in their will, but talking openly about your plans can prevent disputes later.
- Changing relationships – once the gift is made, the home is legally theirs. If your relationship with them changes, or their marriage breaks down, you have no say over what happens to it.
- Care home fees – if you later need care, the local authority can treat a gifted home as though you still own it if it decides you gave it away to avoid fees. This is known as ‘deprivation of assets’.
- Financial difficulty – if you’re struggling with debts when you make the gift, or soon afterwards, it can be challenged and reversed by creditors for up to five years.
- Lost allowances – your estate may lose the residence nil-rate band, and your family member loses their first-time buyer status.
| Pros | Cons |
| You see your family benefit from the home during your lifetime | You lose control of the property |
| Inheritance Tax-free if you survive seven years | Living there rent-free cancels the Inheritance Tax benefit |
| Can help a child or grandchild get settled sooner | They lose first-time buyer status |
| Can reduce the size of your estate | Your estate may lose the residence nil-rate band |
| Can avoid delays in passing the home on after your death | Can cause tension between siblings |
Gift Now or Leave It in Your Will?
For many families, the main consideration is whether they should gift a property or leave it in a will.
CGT is one of the main differences – there’s no CGT when someone dies, and the property’s value resets for whoever inherits it. So if you gift a second home or buy-to-let during your lifetime, you could trigger a CGT bill that your family would avoid if they inherited the property.
Example
David bought a holiday cottage for £200,000. It’s now worth £350,000. If he gifts it to his son today, HMRC treats it as a £150,000 gain, and David could owe over £30,000 in CGT.
If his son inherits the property instead, there’s no CGT, and his son’s starting value is £350,000.
This example has been simplified. The actual tax depends on David’s income and allowances.
| Gift it now | Leave it in your will | |
| Inheritance Tax | Free after seven years | Due if your estate is over the thresholds |
| Capital Gains Tax | May be due on second homes | None on death |
| Residence nil-rate band | May be lost | Available if the home goes to your children or grandchildren |
| Control | You give it up | You keep it |
| When your family benefits | Now | After your death |
When it comes to gifting your property to a family member and maximising the value they can get from it, there’s no one right answer.
It depends on your estate size, your health, the type of property, and your family’s needs. That’s why you should get tax and legal advice before you decide.
Thinking About Gifting Property to a Family Member? We Can Help
Gifting property to a family member is a big decision, and getting the legal side right protects you both. At Bespoke Law Services, our conveyancers can handle the legal transfer for you:
- Checking the title and dealing with any co-owners
- Getting your mortgage lender’s consent
- Preparing and registering the transfer with HM Land Registry
- Working alongside your tax or financial adviser
We’re regulated by the Council for Licensed Conveyancers. You’ll have a dedicated conveyancer from start to finish, and you’ll always speak to real people, not call centres.
To see what the legal work typically costs, read our conveyancing fees explained guide.
Gifting Property to a Family Member: FAQs
How much property can I gift to a family member tax-free?
There’s no limit on how much you can gift. IHT only applies if you die within seven years and your gifts and estate together are worth more than the tax-free threshold. Small annual gift exemptions can also help. Explore Inheritance Tax rules and allowances on GOV.UK.
Who pays Inheritance Tax on a gifted property if I die within seven years?
The person who received the property is usually responsible for any IHT due on the gift. Because the gift uses up some or all of your tax-free threshold, it can also increase the tax due on the rest of your estate.
Can I give part of my house to my son or daughter?
Yes. You can gift a share of your home and remain a co-owner. You’ll need to decide whether to own it as joint tenants or tenants in common, and if you still live there, take advice on the reservation of benefit rules.
Can I sell my house to a family member for £1?
Yes, but HMRC treats the difference between the £1 and the property’s market value as a gift. The seven-year rule for IHT still applies, and CGT may be due if it isn’t your main home.
Will my child lose first-time buyer status if I gift them a property?
Yes. Owning or part-owning any home, even one they were given, means they’re no longer a first-time buyer. They won’t be able to claim first-time buyer Stamp Duty relief or use a Lifetime ISA for a future purchase.
Do I need to tell HMRC when I gift a property?
If CGT is due, you must report and pay it within 60 days. Even if no tax is due now, keep a record of the gift, its value and the date, so your executors can deal with any IHT later.
Can I gift a property to my grandchildren?
Yes. The same tax rules apply as for children, and grandchildren count as direct descendants for the residence nil-rate band. Grandchildren under 18 can’t own property directly, so it would need to be held in a trust.
How long does it take to transfer a gifted property?
A straightforward transfer usually takes a few weeks. The main things that affect timing are getting your lender’s consent and how long HM Land Registry takes to register the change.
