Accountants for owners gifting property to family
You are thinking about giving a property, or a share of one, to your children or another family member. Perhaps it is a rental you no longer want to run, perhaps it is the family home and the point is keeping it out of a future inheritance tax bill. Either way the tax lands before any money moves, because a gift between connected people is treated as a disposal at market value even though nothing is paid. The review turns on the capital gains position on the gift, whether you keep any benefit afterwards, and whether a mortgage travels with it. Two numbers decide it: the cost of gifting now and the cost of doing nothing. The filing dates come with them.
What lands on your desk
Tax on gifting property to family: CGT, inheritance tax and stamp duty
Capital gains tax falls due even though no money changes hands
A transfer to a child or other connected person is a disposal at market value under TCGA 1992 s.17 and s.286. The gain is that value less what you paid and your allowable costs, and residential gains are taxed at 18% and 24% in 2026/27 after an annual exempt amount of £3,000. Only a spouse or civil partner transfer escapes it, and an ordinary buy to let has no holdover, so the tax is payable in cash. The CGT calculator sizes it.
Keeping any benefit undoes the inheritance tax saving
An outright gift to an individual leaves your estate if you survive seven years, with taper reducing the tax on gifts above the nil rate band from year three. But if you carry on living there, or keep a slice of the rent, FA 1986 s.102 makes it a gift with reservation and the property sits back in your estate at its death value. The reservation of benefit rules are where most family gifts fail.
The shared-occupation carve-out is narrower than it looks
There are three ways out. Pay a full open-market rent to the new owners, evidenced and reviewed. Move out entirely. Or use the FA 1986 s.102B(4) carve-out: gift an undivided share, both of you genuinely occupy the property as a home, and you take no benefit from the recipient connected with the gift. Only the third lets you stay rent free, and it fails if the recipient does not live there.
Stamp duty appears when a mortgage moves with the property
A gift of an unencumbered property carries no stamp duty, because the charge falls on what is paid. It appears when the recipient takes on the mortgage: FA 2003 Sch 4 para 8 treats the assumed debt as chargeable consideration at residential rates, capped at market value. Where the recipient already owns a home the 5% surcharge can apply. The deed of gift and SDLT position has the detail.
How we help
What we work out before you gift a property
The cost of the gift, before you sign anything
One of our property tax specialists reviews your acquisition cost, improvement spend and any period the property was your main home, then sets the gain against a current valuation. You see the figure, the date it is payable, and how it moves if the gift is split across two tax years or two owners. The work is one-off property tax advice, with no need to move your accounts to us.
A reservation of benefit review before the deed is drawn
The review covers what actually happens after the gift: who lives there, who collects the rent, who pays the bills, and whether money comes back to you. That is measured against FA 1986 s.102, s.102A and s.102B and the pre-owned assets charge. Where you need to stay, your accountant prepares the rent calculation and its evidence.
The stamp duty position on any debt that travels
Where a mortgage or a share of one is taken over, a specialist calculates the chargeable consideration, checks whether the surcharge catches the recipient, and confirms whether a return is notifiable at all. That figure often decides whether the mortgage is redeemed first or moved. The stamp duty calculator gives a first pass.
Filings, records and the order of a larger handover
The 60-day capital gains return is prepared where tax arises, the disposal is reported again at self assessment, and the gift is recorded with its date and valuation so your executors can evidence the seven-year position. Where a portfolio is passing down, the order of the transfers is written down with dates.
Not sure which of these applies to you? A free consultation sets out where you stand, with no obligation.
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Frequently asked questions
Yes, in almost every case. A gift to a child is a disposal to a connected person, so the gain is worked out on market value on the day of the gift, not the nil price paid. In 2026/27 residential gains are taxed at 18% for basic rate and 24% for higher rate, after an annual exempt amount of £3,000. An ordinary buy to let has no holdover, so the tax is payable in cash.
You can, but it usually achieves nothing for inheritance tax. Under FA 1986 s.102 a gift where you keep possession or any benefit is a gift with reservation, so the house stays in your estate at its value on the date of death and the seven-year clock never starts. The exits are narrow: pay a full market rent, move out completely, or gift a share where you both genuinely live there.
Not on the gift itself, because stamp duty is charged on what is paid and a gift has no price, so a gift deed (a deed of gift) for an unmortgaged property carries no stamp duty. The charge appears where a mortgage moves with the property: FA 2003 Sch 4 para 8 treats the debt the recipient takes on as chargeable consideration, taxed at residential rates and limited to market value. Where the recipient already owns a home the surcharge can apply on top.
The gift comes back into the inheritance tax calculation against your nil rate band, which is £325,000 per person and frozen until 5 April 2031. Within that band there is no tax on the gift, though it reduces the band left for your estate. Above it, taper reduces the tax due, not the value of the gift: 80% of the full rate at three to four years, then 60%, 40% and 20% by year seven.
They pay income tax on their share of the rent from the date of the gift, and they take your market value at that date as the base cost for a future sale. If they live in it as their only or main home, private residence relief may cover most of the later gain. If your child is under 18, the settlements rules attribute the rent back to you until they turn 18.
It changes both taxes. A gift into most trusts is a chargeable lifetime transfer rather than a potentially exempt transfer, with a 20% entry charge on value above the nil rate band and ten-year charges after. In exchange, holdover under TCGA 1992 s.260 can defer the gain, provided neither you nor your spouse can benefit. A bare trust sits outside that regime.
Three are usually compared. Gifting a share rather than the whole: each share is still a disposal at market value of that share, and where you and the recipient both genuinely live there the shared-occupation carve-out can let you stay without a reservation of benefit. Gifting into a trust: a chargeable lifetime transfer, but holdover can defer the gain where neither you nor your spouse can benefit. Or keeping it: property you still own at death passes at its market value then, so the lifetime gain is never charged, though the full value stays in your estate for inheritance tax.
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