Should I gift my home to my children? What you need to know first.

It’s a question I hear all the time - “Steve, should I just give my house to the kids now?”

On the surface, it sounds simple and generous. You want to help your children, make things easier later on, and maybe even reduce Inheritance Tax. But the truth is, gifting property is rarely straightforward, and it can have big implications legally, financially, and personally.

So before you make any decisions, here’s what you really need to know.

Can I give my home to my children?

Yes, you can but it’s important to understand the consequences before doing so. Once you transfer ownership, it’s no longer your property. That means you lose control over what happens to it, and it could be affected if your child later divorces, gets into debt, or faces bankruptcy.

That said, gifting your home can sometimes be a wonderful way to pass on wealth while you’re still here to see your children benefit. The key is getting the right advice first, so you know exactly what the impact will be for both sides.

Does it help with Inheritance Tax?

Potentially, yes but only if you survive seven years after making the gift.

Here’s how the tax works if you pass away before the seven years are up:

Years between gift and death Tax on the gift

3 to 4 years 32%

4 to 5 years 24%

5 to 6 years 16%

6 to 7 years 8%

7+ years 0%

You also benefit from certain allowances, like the £325,000 nil rate band, plus an additional £175,000 residence allowance if you’re leaving your home to your children or grandchildren.

Together with your spouse’s unused allowance, this could mean up to £1 million can pass tax free.

However, everyone’s situation is different, and Inheritance Tax can be complex.

It’s always best to get proper legal advice before transferring ownership.

Can I gift my home to avoid care fees?

This is one of the biggest misconceptions I see. Unfortunately, you can’t give your home away to avoid paying future care home fees.

If the local authority believes the gift was made deliberately to reduce your assets known as deliberate deprivation, they can still treat the property as yours when assessing your care costs, even years later. There’s no time limit on this.

Can I still live in my home after gifting It?

If you stay living in the property after transferring it to someone else, it becomes what’s called a “gift with reservation of benefit.”

That means you’ve technically given it away, but you’re still benefiting from it so HMRC will treat it as part of your estate for Inheritance Tax purposes.

There’s also a personal risk: once the property is legally in someone else’s name, you have no control. If your child’s circumstances change divorce, debt, or disagreements you could lose your right to stay there.

Will I need to pay capital gains tax (CGT)?

If it’s your main home, there’s no CGT to pay when gifting it.

But if it’s a second home or holiday property, you’ll need to pay CGT on any increase in value since you bought it.

What about the children are there risks for them?

Yes, and they’re often overlooked. If your child receives your property as a gift, it could affect them financially:

It could be lost in a divorce settlement or bankruptcy.

It might reduce or remove their eligibility for certain benefits.

If they later buy another property, they’ll face higher Stamp Duty because they already own one.

The bottom line

Passing your home to your children is a big decision and while it can feel like a generous and loving gesture, it needs careful thought. The tax rules, family dynamics, and future implications can be complex, so it’s worth taking time to get the right advice before acting.

If you’re thinking about gifting property, I’m happy to talk it through with you. We’ll look at your options, discuss any risks, and make sure whatever you decide truly protects both you and your family.

Call us on 01727 634839

Or email us at contact@sbishestateplanning.com