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, 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.
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If you die within those seven years, there could be an Inheritance Tax bill.
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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.
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HMRC treats it as if you’ve sold the property at market value, even if no money changes hands.
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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.
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.
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You can’t change your mind.
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If they separate from a partner or run into financial issues, the property may be at risk.
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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.
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