Gifting a property to children? How to transfer home ownership

You may decide, perhaps for inheritance tax planning reasons, to transfer part or full ownership of your home to a child or family member.

When transferring equity in your home, you will need to be aware of the various options and of the risks involved.

Share this article
Parent child gifting property enquiry

What is a transfer of equity?

Adding someone to the deeds of a property while still retaining a share yourself is known as a transfer of equity.

Transfers of equity are common when a newly-married homeowner wants to add their spouse to the title deeds of their house. A transfer of equity is also common when a couple that co-owns a property decides to separate.

Parents may also want to transfer equity in their home to their children to minimise the impact of Inheritance Tax (IHT).

Financial considerations

There may be cost implications when transferring equity. The person taking on the equity may be required to pay Stamp Duty Land Tax (SDLT) and the equity donor may have to pay Capital Gains Tax (CGT) on the transaction.

If you are taking on equity and a mortgage of more than £125,000, then you’ll be required to pay stamp duty and tax on any equity over this threshold.

(NB: Temporary changes to SDLT are currently in effect as part of the COVID-19 stamp duty holiday. Read more here.)

If you are transferring equity as a result of divorce or dissolution of a civil partnership, then you will not need to pay SDLT, but may be liable to pay CGT, depending on whether you have lived together during the tax year in which the transfer was made.

Read more:

Do I pay Stamp Duty Land Tax (SDLT) on a transfer of equity?

Do I have to pay Capital Gains Tax (CGT) on a transfer of equity?

Sharing the equity

When considering sharing the equity in your home, you must also decide on the type of shared ownership you want.

You and the person you are sharing with can either be:

Joint tenants

As joint tenants, you will each hold an equal share of 50% of the property, and if one person dies, then the property ownership automatically goes to the other partner - you cannot pass on ownership of the property in your will.

Tenants in common

Tenants in common, however, can own different % shares in the property, and if one person dies, ownership of the deceased person's equity does not automatically go to the other party. This is common for divorced couples sharing a property, and it means you can pass on your share of the property in your will to whomever you wish.

Can I transfer equity to a person under the age of 18?

You may wish to transfer ownership in a property to someone who is under the age of 18. A minor cannot legally hold property in their own name. However, it is possible for a property to be held in trust. Once the person turns 18, ownership of the equity can be transferred to them.

The minor can be a related or unrelated person.

A solicitor will be able to complete the formalities of forming a trust, which will include setting up a 'trust deed'.

Gifting a property

Sometimes people choose to gift their entire home to a family member - this is known as a 'Transfer by Way of Gift', or a 'Deed of Gift'.

Parents often choose to do this in a bid to reduce the amount of Inheritance Tax (IHT) their children will need to pay.

Inheritance Tax starts at a 40% and applies to the total value of an estate (including property) over the tax-free threshold of £325,000.

However, if you own your home or a share in it, the tax-free threshold can increase to £500,000 if you leave it to your children.

If you gift a property to your child while you’re still alive, IHT may be reduced.

If you die within 7 years of gifting a property, then your children will still have to pay inheritance tax, though if you die between 3 and 7 years, the amount of inheritance tax your children will have to pay becomes gradually lower.


Years between the date of gift and date of deathTax payable
less than 340%
3 to 432%
4 to 524%
5 to 616%
6 to 78%
7 or more0%


Married couples

Married couples or civil partners may also choose to gift part of their property instead of transferring equity. In this case, as no money is involved in the transfer, there would be no SDLT or CGT payable.

Are there any risks in transferring property to children?

There are potential risks when gifting your property to children. Once you have gifted the property, either to a trust if the child is under 18 or to your child directly if over 18, the property is no longer yours.

Parents often intend to continue living at the property once it has been gifted. Problems can sometimes arise if the unforeseeable happens. if, for example, the child divorces, dies or is unable to keep up any mortgage repayments, the parent would have no claim over the property and could end up with nowhere to live.

How do I give my property to another family member?

The process for gifting property (or a share in a property) to another family member is similar to the process for gifting to a child.

Generally, the same rules apply (including for transfers to minors and for inheritance tax), regardless of whether the person receiving property is your child, grandchild, sister or another family member.

Some rules may be different, particularly regarding Capital Gains Tax. You should speak to a tax specialist about whether the relative you are giving property to is considered a 'connected person', and what tax rules apply.

Getting professional tax advice is critical as you could end up with a CGT bill if your transfer is mishandled.

What to think about before you start...

A number of things should be taken into account before you make the first steps to gift your home.

If you have a mortgage or debt secured on the property, then you will need to clear this before you are able to gift it to someone else.

It’s also important to think about your financial situation when it comes to potential insolvency. If you give your house away and go bankrupt within five years of the transfer, then the official receiver may have the power to claim the property back if it is felt that the transaction was deliberately undertaken in order to put the property out of reach of creditors.

You should also consider where you are going to live after you have gifted the property. You may continue to live in your home once you have transferred it, but to avoid tax implications, you must pay rent to the person you have transferred it to at the market rate. If a tenancy agreement or similar arrangement is not in place, you will not retain any legal right to remain present in the property.

Your next step

Whether you are gifting a property to a child, getting married or separating, or transferring equity for any other reason, we can help you find an expert conveyancing solicitor. Even if you are just looking for advice, we can help.

If you are also planning to remortgage as part of the transfer process, the remortgage legal work can be completed at the same time as your transfer of equity.

  • Transfer of equity experts
  • No Completion, No Fee Guarantee
  • CQS-accredited panel solicitors
  • Fixed fees - All-inclusive Quote
Get a quote

All-inclusive quote from £384 inc VAT

Get a Quote Now
Prefer to talk?

Speak to an expert about your your transfer of equity.

Open Mon-Fri 9am-8pm, Sat/Sun 10am-4pm.

Call FREE 0800 022 4103 or arrange a callback

Share this article
Chris Salmon, Director

Chris Salmon, Director