Giving a home to someone you love can feel like the right thing — a way to help your children get started, or to pass something on while you’re still around to see it appreciated. But before you make that decision, it’s important to understand what it really means — legally, financially, and emotionally.

At Hastings Legal, we’ve helped many families navigate this path. Here’s what to think about before you hand over the keys.

Inheritance Tax: It’s All About Timing

Even if you gift the property during your lifetime, it may still count as part of your estate if you pass away within seven years. This is called a Potentially Exempt Transfer.

• If you die within those seven years, there could be an Inheritance Tax bill.
• If you continue living in the property rent-free, HMRC might not view it as a true gift — which could bring it back into your estate for tax purposes.

It’s a generous move, but the tax rules don’t always see it that way.

Capital Gains Tax: Not Just for Sellers

If the property you’re gifting isn’t your main home — say it’s a holiday cottage or rental — you may be hit with Capital Gains Tax at the point of gifting.

• HMRC treats it as if you’ve sold the property at market value, even if no money changes hands.
• That means you could face a tax bill on the profit, just as if you’d sold it.

It can come as a surprise — especially when your intention is to give, not gain.

Scottish Considerations: LBTT and Registration

In Scotland, the person receiving the gift may still need to pay Land & Buildings Transaction Tax (LBTT) if they take on a mortgage as part of the transfer.

The transfer must also be registered with the Registers of Scotland — which means legal fees and registration dues, even if no money is exchanged.

Once It’s Gone, It’s Gone

This part’s simple but important: once you gift a property, it belongs to the other person. Fully. Legally.

• You can’t change your mind.
• If they separate from a partner or run into financial issues, the property may be at risk.
• You lose control — even if your heart’s still in the right place.

Sometimes, that’s fine. But if you’d rather keep some say in what happens next, there are safer ways to do it.

What to Consider Instead

If you want to help but retain some control or protection, options include:

• Liferent arrangement — lets someone live in the property for life without owning it outright.
• Update your Will — you keep full ownership now but decide who inherits later.
• Joint ownership with clear title arrangements — ensures your wishes are recorded in law.

The right option depends on your circumstances — and the balance you want between generosity and protection.

Need Advice?

We can:

• Review your title and tax position before you gift.
• Explain how to protect yourself and the recipient.
• Put the legal paperwork in place correctly.

Call 01573 226999 or email enq@hastingslegal.co.uk for clear, practical advice before you commit.