Can I give my house to my children to avoid inheritance tax?

Only if you stop benefiting from it. gov.uk says there is 'normally no Inheritance Tax to pay if you move out and live for another 7 years'. If you keep living there, you must pay your children rent at the going rate and your share of the bills. Otherwise the gift counts as a 'gift with reservation' and the house is added back to your estate when you die, at its value on the date of death, however long ago you gave it away.

What is the 7-year rule for giving a house away?

If you give your house away and stop benefiting from it, it falls outside your estate once you have lived 7 more years. If you die sooner, it is counted back in at its value when you gave it. Gifts use up the £325,000 tax-free threshold first. Tax is only due if the gifts in the 7 years before death total more than £325,000, and the rate on that excess is reduced if the gift was made 3 to 7 years before death. The 7 years do not start while you are still living in the house rent-free.

What is a gift with reservation of benefit?

It is a gift you keep benefiting from. gov.uk's examples include 'giving your home to a relative but still living there'. The law treats the property as still part of your estate when you die (Finance Act 1986, s.102). If the benefit stops during your lifetime, for example because you move into a care home or start paying a market rent, the 7-year clock starts from that date.

Do I have to pay rent if I give my house to my children?

If you carry on living there and want the gift to work for inheritance tax, yes. gov.uk says you must pay rent 'at the going rate (for similar local rental properties)' and your share of the bills. The exception is a gift of a share of the house where your children also live there with you. In that case you do not pay rent, as long as you pay your share of the running costs and get no other benefit at their expense. A share given to a child who lives elsewhere does not get this exception.

What is a deed of gift for a house?

It is the everyday name for a document that gives something away for nothing. In England and Wales, a house can only be transferred by deed (Law of Property Act 1925, s.52), and the transfer only takes legal effect once it is registered with HM Land Registry (Land Registration Act 2002, s.27). For a whole registered property, the deed is normally HM Land Registry form TR1. The Land Registry fee for a gift depends on the property's value and starts at £20 online.

Will my children pay Capital Gains Tax if I give them my house?

Not when they receive it. When they later sell, their gain is worked out from what the house was worth on the day you gave it to them. If it is not their main home, they pay Capital Gains Tax on any rise since then, at 18% or 24%. If they had inherited it instead, the starting value would have been its value at your death. You will not usually pay Capital Gains Tax yourself on giving away your own main home.

Is there stamp duty when you give a house to your children?

Not if there is no mortgage. gov.uk says 'if you get property as a gift you'll not pay Stamp Duty Land Tax as long as there's no outstanding mortgage on it'. If your child takes over a mortgage, the amount they take on is treated as the price, and Stamp Duty Land Tax is due if it is above the threshold, currently £125,000 for homes. Scotland and Wales have their own taxes instead.

My parent gave me their house and has now died. What happens?

It depends on whether your parent kept living there. If they lived there rent-free until they died, the house is taxed as part of their estate at its value on the date of death. If they moved out, or paid a market rent, the gift counts from that point: if they lived 7 years after it, it is outside the estate; if not, it is counted at its value on that date. The executor must report the gift to HMRC. You, as the person who received the house, may have to pay any tax due on it.

Giving your house to your children: the 7-year rule, gifts with reservation and the deed of gift

Giving the family home to your children is one of the most common ideas for reducing inheritance tax, and one of the most misunderstood. It can work, but only if the person giving the house lets go of it. If they carry on living there without paying rent, HMRC treats the house as still theirs when they die, and the gift can also leave the children with a larger Capital Gains Tax bill than if they had inherited it.

Inheritance tax, Capital Gains Tax and the gift with reservation rules apply across the UK. Stamp Duty and the steps for transferring a house differ by nation, and this guide describes England and Wales.

If a parent gave you their house and has now died: the house may still be taxed as part of their estate, depending on whether they kept living there and when. The executor reports it to HMRC, and you may be asked to pay the tax on it. See if your parent gave you their house and has now died for the steps. Most of the rest of the guide is for anyone thinking about giving their home away.

The short version:

A gift of a house counts as a lifetime gift. If the giver stops benefiting from it and lives 7 more years, it is outside their estate for inheritance tax
If the giver keeps living there rent-free, it is a gift with reservation. The house stays in their estate at its value on the date of death, however long ago it was given
To keep living there and still make the gift work, the giver must pay a market rent and their share of the bills. The exception is giving a share of the house to children who all live there too
The children’s Capital Gains Tax starting value is what the house was worth on the day of the gift, which is often far lower than its value years later
In England and Northern Ireland there is no Stamp Duty Land Tax unless the children take over a mortgage of more than £125,000
Giving a home away to avoid care home fees is judged under separate rules, with no 7-year time limit
The transfer must be made by deed, usually HM Land Registry form TR1, and registered

If your parent gave you their house and has now died

Sorting this out soon after a death is a lot to take on, and it does not all have to be done at once. The executor of the estate (or the administrator if there was no will) leads on the tax paperwork. The steps below explain what will happen and what you may need to do.

1. Gather the facts

The answer turns on dates and living arrangements, so collect:

When the house was transferred. The transfer deed or HM Land Registry’s title register will show this (gov.uk – Search for land and property information)
Whether your parent kept living there after the gift, and if they moved out, when
Any evidence of rent they paid you, such as bank statements or a tenancy agreement
What the house was worth on the date of the gift, and on any date your parent moved out or started paying rent. An estate agent or chartered surveyor can value a property at a past date. Ask the executor or the estate’s solicitor before paying for one

2. Work out which situation applies

What happened	Inheritance tax result
Your parent lived there rent-free until they died	A gift with reservation. The house is taxed as part of their estate at its value on the date of death
Your parent moved out, or started paying a market rent, and lived 7 years after that	Outside the estate. No inheritance tax on the house
Your parent moved out, or started paying a market rent, but died within 7 years of that	A failed gift. It is counted back in at its value on the date of the gift, or on the later date they moved out or started paying rent

The 7 years run from the date of the gift if your parent moved out straight away, or from the later date when they moved out or started paying rent. gov.uk gives the example of a man who put his house in his children’s names in 2011, lived there until he moved into a nursing home in 2013, and died in 2021. The 7 years ran from 2013, so the house was outside his estate (gov.uk – Work out Inheritance Tax due on gifts).

A failed gift only produces tax on the gift itself if the gifts your parent made in their last 7 years add up to more than £325,000, the tax-free threshold. Below that, there is no tax on the gift, but it uses up the threshold, so the rest of the estate pays more.

3. You may be liable for the tax

You may have to pay inheritance tax on the house yourself, out of your own money if necessary. gov.uk says:

Gift with reservation: the tax “is usually paid by the recipient of the gift. If tax is outstanding 12 months after the person died, their personal representative may have to pay it”. The personal representative is the executor or administrator
Failed gift: if the person who died gave away more than £325,000 in their last 7 years, anyone who received a gift from them in that time has to pay the inheritance tax on their gift (gov.uk – Rules on giving gifts)

Inheritance tax is due by the end of the sixth month after the death, whoever ends up paying it (gov.uk – Pay your Inheritance Tax bill). The 12-month point only decides when the executor can be asked to cover tax on a gift with reservation that has not been paid. Speak to the executor or the estate’s solicitor early. Our guide to how to pay inheritance tax covers paying in instalments where the tax is on property.

4. Make sure the gift is reported

The executor must work out every gift made in the 7 years before death and report them to HMRC. Where the estate needs a full inheritance tax account (form IHT400), gifts go on its schedule, form IHT403. gov.uk says a gift with reservation always needs both forms, whenever it was made (gov.uk – Work out Inheritance Tax due on gifts). If you are the executor, this is your job. If not, pass the facts from step 1 to the executor.

5. Ask about the residence nil-rate band

The residence nil-rate band is an extra tax-free allowance of up to £175,000 when a home passes to children or grandchildren. If the house is taxed as a gift with reservation, the law treats you as having inherited it, so the allowance can still apply (legislation.gov.uk – Inheritance Tax Act 1984, s.8J(6)). If the gift succeeded, the estate may be able to claim the downsizing addition instead. The residence nil-rate band section below explains both.

6. Check the gift-date value for Capital Gains Tax

If you sell the house and it is not your own main home, your Capital Gains Tax is worked out from its value on the day it was given to you. The usual rule that resets the value at death applies only to assets the person who died could have left in their will (legislation.gov.uk – Taxation of Chargeable Gains Act 1992, s.62(10)). A house they had already given away belonged to you, so that reset does not normally apply, even if the house is also taxed in their estate as a gift with reservation. Ask the estate’s solicitor or a tax adviser to confirm the figure before you sell.

Can you give your house to your children?

Yes. A house can be given away like any other asset, and for inheritance tax it counts as a gift. gov.uk lists “a house, land or buildings” among gifts, and says that selling your house to your child for less than it is worth is a gift of the difference (gov.uk – Rules on giving gifts).

The government’s guidance on giving away a home is short: “There’s normally no Inheritance Tax to pay if you move out and live for another 7 years.” If you want to keep living there, you need to “pay rent to the new owner at the going rate (for similar local rental properties)” and “pay your share of the bills. Otherwise it counts as a ‘gift with reservation’ and will be added to the value of your estate when you die” (gov.uk – Passing on a home).

The 7-year rule for a gifted house

A gift to your children is a “potentially exempt transfer”: it becomes fully exempt once you have lived 7 years after making it (gov.uk – Work out Inheritance Tax due on gifts). If you die within 7 years:

The house is valued at what it was worth when you gave it. If it has since fallen in value, the person paying the tax can claim fall in value relief and use the lower value at death instead
Gifts use up the £325,000 tax-free threshold first, before the rest of the estate. Our guide to the nil-rate band explains the threshold, including the unused threshold a widow or widower can inherit from their late spouse
Tax on the gifts is only due if they total more than £325,000, and then only on the excess. For gifts made 3 to 7 years before death, the rate on that excess is reduced:

Years between gift and death	Rate of tax on the gift
Less than 3	40%
3 to 4	32%
4 to 5	24%
5 to 6	16%
6 to 7	8%
7 or more	0%

Source: gov.uk – Rules on giving gifts. Our guide to gift rules and the seven-year rule works through the running total in more detail.

Gifts with reservation: if you keep living there

A gift with reservation is “where you give something away but continue to benefit from it”. The government’s first example is “giving your home to a relative but still living there” (gov.uk – Rules on giving gifts). The rule comes from section 102 of the Finance Act 1986: a gift is caught if your children do not take real possession of the house, or if you are not shut out from benefiting from it (legislation.gov.uk – Finance Act 1986, s.102; HMRC IHTM14301).

If the reservation is still in place at death, the house “counts as part of their estate. It does not matter when they gave it. It is taxed at the market value at the time of their death as if they still owned it” (gov.uk – Work out Inheritance Tax due on gifts).

When living there does not count as a reservation

Paying a full market rent. HMRC accepts that living in the house is not a reservation if you pay the full value for it. It looks for a deal agreed “at arm’s length” (as it would be between strangers) “by parties who were independently advised” (HMRC IHTM14341). HMRC also checks that full rent was paid for the whole period, so review the rent as local rents change, and pay your share of the bills too
Giving a share and living there together. You do not have to pay rent if you only give away part of the house and the new owners live there with you (gov.uk – Passing on a home). The law requires that you all live there and that you get no more than a negligible benefit at your children’s expense, so pay your fair share of the running costs (legislation.gov.uk – Finance Act 1986, s.102B). HMRC’s example is a mother who puts her house into joint names with her two children: the share given to the son who lives with her is fine, but the share given to the daughter who lives elsewhere is a reservation (HMRC IHTM14332). The exception lasts only while you all live there
Moving back in because of age or illness. HMRC ignores a parent’s return to the house if they could not have foreseen the change, can no longer look after themselves because of old age or illness, and the child, or another relative, is providing reasonable care (HMRC IHTM14342). HMRC’s example is a healthy father who gives his house to his son and, five years later, develops motor neurone disease and moves back to be cared for

When the reservation ends

If the reservation stops during your lifetime, for example because you move out or start paying a market rent, the 7-year clock starts from that date. The house is valued at what it is worth on that date, and the £3,000 inheritance tax annual exemption for gifts cannot be taken off (HMRC IHTM04072).

Sometimes the same house could be taxed twice: once as a failed gift and once as a gift with reservation. HMRC applies regulations that let one charge stand and reduce the other to nil, so the house is only taxed once (HMRC IHTM04072).

Pre-owned asset tax

Pre-owned asset tax is a yearly income tax charge on people who still benefit from something they gave away, or paid towards, in a way the gift with reservation rules do not catch. It covers land, belongings, and things such as cash and shares (HMRC IHTM44001; Finance Act 2004, Schedule 15). For a home, the charge is based on what it would cost to rent, minus any rent you are legally obliged to pay (HMRC IHTM44010).

Key points:

It does not apply on top of a gift with reservation. If you gave the house away and still live there rent-free, the inheritance tax rules above apply instead (HMRC IHTM44040)
The usual family case is a gift of money. If you give a child money towards a house and later live in it, the charge can apply. It does not if the money was an outright gift made at least 7 years before you moved in (HMRC IHTM44036)
Small amounts are exempt. There is no charge if the yearly rental value is £5,000 or less. Above £5,000 the whole amount is charged, and it is the full rental value, before any rent you pay, that is compared with the limit (HMRC IHTM44056)
You can choose inheritance tax instead. Form IHT500 lets you elect to have the property treated as part of your estate. It must be sent “by 31 January after the tax year in which [the owner] became liable”, and “an election cannot be made after the person’s death” (gov.uk – Work out Inheritance Tax due on gifts)

Capital Gains Tax on giving away a house

Giving something away counts as disposing of it for Capital Gains Tax, and for a gift the gain is worked out using the market value on the day of the gift (gov.uk – Capital Gains Tax: market value).

For the parent. If the house has been your only or main home the whole time you owned it, Private Residence Relief, the relief for your own home, normally means there is no tax to pay (gov.uk – Tax when you sell your home). If it is a second home or a let property, tax is due on the rise in value up to the date of the gift, and gains on UK homes generally have to be reported and paid within 60 days (gov.uk – Capital Gains Tax: reporting and paying).

For the children. This is the cost families most often overlook. The children’s starting value for a future sale is what the house was worth on the day it was given to them. If they had inherited it instead, their starting value would have been its value at the date of death, usually the value used for inheritance tax (gov.uk – Tax when you sell property). If the house is not their own main home when they sell, they pay tax on the rise since the gift at 18% or 24%, after a £3,000 yearly allowance (gov.uk – Capital Gains Tax rates; allowances).

A worked illustration with made-up figures: a house given in 2016 when worth £250,000 and sold by the child in 2027 for £400,000 has a gain of £150,000. After the £3,000 allowance, a higher-rate taxpayer would pay 24% on £147,000, which is £35,280. Had the child inherited the same house at a death in 2027 with a probate value of £400,000, a sale soon afterwards would produce little or no gain.

Stamp Duty Land Tax

gov.uk says: “If you get property as a gift you’ll not pay Stamp Duty Land Tax as long as there’s no outstanding mortgage on it.” If your child takes over some or all of a mortgage, the amount they take on is treated as the price, and tax is due if it is more than the threshold (gov.uk – SDLT: transfer ownership of land or property). For homes the threshold is £125,000 (gov.uk – Stamp Duty Land Tax). If the house has a mortgage, speak to the lender before doing anything.

Stamp Duty Land Tax applies in England and Northern Ireland. Scotland has Land and Buildings Transaction Tax and Wales has Land Transaction Tax.

The residence nil-rate band

The residence nil-rate band adds up to £175,000 to the tax-free threshold when a home passes to children or grandchildren on death. It is reduced for estates worth more than £2 million (gov.uk – Work out the residence nil rate band). gov.uk says it “does not apply to gifts and lifetime transfers”, so a house given away successfully during life cannot use it.

Some of the lost allowance can come back through the downsizing addition. The main conditions are (gov.uk – How downsizing, selling or gifting a home affects the residence nil rate band):

the person sold, gave away or moved out of a home on or after 8 July 2015
that home would have qualified if they had kept it until they died
their children or grandchildren inherit at least some of the estate

The addition is limited by the value of what else passes to the children or grandchildren, and the executor must claim it within 2 years of the end of the month of death. Keep a note of the date and value of the gift so the executor can make the claim.

If the gift fails because of a reservation, the house is back in the estate and the law treats the children who received it as inheriting it, so the residence nil-rate band can apply in the usual way (legislation.gov.uk – Inheritance Tax Act 1984, s.8J). Our guide to the residence nil-rate band explains the conditions.

How to transfer a house: deed of gift and form TR1

“Deed of gift” is the everyday name for a document that gives something away for nothing. In England and Wales, two legal rules shape how a house is given:

It must be done by deed. A transfer of land that is not made by deed does not pass legal ownership (legislation.gov.uk – Law of Property Act 1925, s.52)
It must be registered. A transfer of registered land “does not operate at law until the relevant registration requirements are met” (legislation.gov.uk – Land Registration Act 2002, s.27)

For a whole registered property, the deed is normally HM Land Registry form TR1, completed to show that no money is being paid (gov.uk – Registered title(s): whole transfer (TR1)). HM Land Registry warns that “there can be significant consequences for any error” and suggests using a conveyancer, a solicitor or licensed specialist who handles property transfers. Its fee for a gift is based on the property’s value, minus any mortgage that stays on it:

Value of the property	Fee by post	Fee online (transfer of a whole property)
Up to £100,000	£45	£20
£100,001 to £200,000	£70	£30
£200,001 to £500,000	£100	£45
£500,001 to £1,000,000	£145	£65
Over £1,000,000	£305	£140

Source: gov.uk – HM Land Registry: Registration Services fees. A gift of a half share is charged on half the value. The process and the registry are different in Scotland and Northern Ireland, so use a solicitor there.

Other things to weigh up

If you are thinking of giving your house to your children, the tax rules are only part of the decision. Once the house is given away, it belongs to them:

Your security. You lose any legal right to live there unless an agreement gives you one, and HMRC treats a right to live there without paying full rent as a reservation (HMRC IHTM14360)
Their circumstances. The house becomes part of your children’s own finances, so it can be affected by their divorce, debts or death
Care fees. Giving a home away to avoid care home fees is assessed under separate rules, with no 7-year limit. See our guide to deprivation of assets and care fees
Fairness. Giving the house to one child changes what the others receive, which can lead to disputes after a death

gov.uk suggests getting “professional advice from a solicitor or a tax adviser about what you can give away tax free during your lifetime”. HMRC’s inheritance tax helpline can answer questions about giving away a home, but “cannot give you advice on how to pay less tax”.

Where to get help

Giving away a home involves property law, three taxes and family relationships at once, so it is worth paying for advice before anything is signed. A solicitor who specialises in wills and estates, or a chartered tax adviser, can check the options. If a parent has already died, the estate’s solicitor or the executor can work out the position from the transfer documents and your parent’s living arrangements. Our guide to inheritance tax on property and the inheritance tax hub cover the wider picture.

Last verified 18 October 2026.