Passing property to your children

Its market value on the date of the gift. A gift to a child, or anyone connected with you, is treated as if you sold the property for its full value, so you can owe capital gains tax at 18% or 24% on the growth since you bought it, even though you received nothing. The 60-day reporting and payment deadline applies too. Your child takes the property at that value for their own future gain.

Not with an outright gift. Gift holdover relief for business assets covers trading assets and shares in trading companies, and an ordinary rental property isn't a trading asset. Furnished holiday lets used to qualify, but that ended in April 2025. Holdover is available on gifts into most trusts, because those gifts are chargeable transfers for inheritance tax, which is one reason trusts are still used.

A gift with no payment is normally exempt from SDLT. But if your child takes over the mortgage, or a share of it, the debt they take on counts as the price, and SDLT is charged on that amount. If they already own a home, the 5% higher-rates surcharge can apply too. Clearing or keeping the mortgage before the gift changes the SDLT result, so plan the order.

Yes. You can give a share of a property each year, for example a quarter at a time. Each gift is a separate disposal for capital gains tax, so you can use a fresh £3,000 annual exempt amount and basic rate band each year, and each starts its own seven-year clock for inheritance tax. You'll need a declaration of trust, your lender's agreement, and to make sure the rent follows the ownership.

Only your share. If you give your child half a property, the rent should be split in line with the new ownership, so you keep half and they receive half. Keeping more than your share is a reservation of benefit for inheritance tax, so the gifted part stays in your estate. It also creates a mismatch for income tax between who owns the rent and who receives it. Set the split out in a declaration of trust.

It's a trade-off. A lifetime gift can save inheritance tax at 40% if you survive seven years, but it triggers capital gains tax now. Leaving property in your will means no capital gains tax, because gains are wiped out on death, but inheritance tax applies in full. Properties with small gains are often the best to gift, while those with large gains may be better kept.

You can, but tax looks through the price. For capital gains tax, a sale to your child is treated as made at market value, whatever they pay. For inheritance tax, the difference between the value and the price is a gift, subject to the seven-year rule. SDLT, on the other hand, is usually charged on the price actually paid, including any mortgage taken over.

Yes, by giving them a share. A gift of, say, half of a property is treated as a disposal of that share at market value for capital gains tax, and as a gift for inheritance tax. From then on, rental profits are normally taxed on each owner by their actual share, because the 50:50 rule only applies to married couples and civil partners. Your lender will need to agree.

Each owner is taxed on the share of profit they're actually entitled to, which normally follows the beneficial ownership set out in a declaration of trust or the deeds. Unlike spouses, there's no automatic 50:50 split. If you keep more of the rent than your ownership share, HMRC may look at the reality of the arrangement, and for inheritance tax it can be a reservation of benefit.

Gifts into most trusts let you hold over the capital gain, so there's usually no CGT up front. But they're immediately charged to inheritance tax at 20% on value above your available nil-rate band, and the trust then has charges of up to 6% every ten years and when property leaves it. Trustees pay CGT at 24% on later gains. Many families transfer up to the nil-rate band every seven years to avoid the entry charge.

Yes. A loan isn't a gift, so there's no capital gains tax and no seven-year clock. But the loan stays in your estate at its full value for inheritance tax, while any growth in the property belongs to your child. You can write off part of the loan later as a gift. Put the loan in writing, and decide whether it should be secured on the property and whether it carries interest, which would be taxable income for you.

Only if you pay a full market rent for living there, and keep doing so. Otherwise it's a gift with reservation of benefit and stays in your estate for inheritance tax. Your child would also be taxed on the rent you pay. If the property was your main home, private residence relief may cover your gain on the gift, but it won't usually be your child's main home for their later sale.

A property given outright belongs to your child and can be taken into account in a divorce. Trusts, family company shares with restrictions in the articles, and prenuptial agreements can all give more protection than an outright gift. It's one reason families often prefer structures that keep the asset separate from the child's personal wealth, at least while they're younger.

The capital gains tax side usually does. If you're UK resident and there's tax to pay on a gift of residential property, a 60-day return and payment are needed, as on a sale. The gift then goes on your Self Assessment return. A potentially exempt transfer isn't reported for inheritance tax at the time, but keep records, because your executors will need them.

It can. Once she owns a residential property, she's no longer a first-time buyer, so she loses first-time buyer relief. And because she'll own another dwelling when she buys her own home, she'll usually pay the 5% higher-rates surcharge on that purchase too. The extra SDLT can be significant. It's often better to time a gift after she has bought her own home, or to use a trust or family company instead.

Look at the gain on each property, the expected growth, the mortgage and the rent. A property with a small gain but strong growth prospects is often a good candidate, because the capital gains tax now is low and the future growth leaves your estate. Mortgaged properties bring SDLT and lender issues. We rank the options for your portfolio with the numbers.