Bird & Co. Solicitors Banner Image
Review stars
  • TrustScore 4.8
  • 703 reviews

Gifting Property & Deed of Gift

Whether to simplify your assets, pass on your wealth to your children or to minimise Inheritance Tax, gifting property is a serious decision. At Bird & Co, we can talk you through the legal and tax implications of giving property as a gift.

You may choose to give away your property for a variety of reasons, not least that you want to provide for a loved one (such as an adult child who may be struggling to get on the housing ladder). Lifetime gifting can also drastically reduce the amount of Inheritance Tax due on your estate after you die, allowing you to leave as much as possible to your loved ones.

Our friendly and approachable solicitors can handle every aspect of the transfer on your behalf. Gifting property requires a Deed of Gift – a legal document which must be completed meticulously to ensure no issues or challenges can arise further down the line. As specialists in the transfer of property deeds, we will ensure your gift is fulfilled accurately, acting swiftly to complete the transfer within a reasonable time frame.

To set up an initial consultation with our legal experts, get in touch by giving us a call at one of our offices in Grantham, Newark, or Lincoln, or by filling in our online enquiry form.

Why choose Bird & Co?

When it comes to gifting property, we combine our nationally recognised conveyancing skills with our equally proficient Wills, trusts and probate expertise. We are members of the Law Society Conveyancing Quality Scheme Accreditation, which is only awarded to firms demonstrating the highest standards of residential property services.

We are also accredited in Lexcel, the legal practice quality mark for firms with exceptional customer service and legal practice management. We attract clients from all over the UK for our specialisms, for whom we have developed a secure system of online conveyancing. Using remote communication methods, you can complete your property transaction without ever needing to leave your home to visit us (unless you want to).

We pride ourselves on being highly responsive. We will regularly update you as your matter progresses and you will always have a direct line and email address for your lawyer. So, if you have any questions, you need only get in touch.

Gifting property – your questions answered

Can you give a property as a gift?

Yes, you can transfer part or the whole of your property as a gift. Deed of Gift is the process of giving away your whole interest in your property (meaning you will no longer be the owner once the transfer is complete).

The process of transferring part of your interest – where you remain the legal owner and someone else is added as joint owner with you or they are otherwise given a beneficial interest – is called transfer of equity.

Why gift your property?

There are many reasons you may want to gift your home or other assets such as money or family heirlooms to your child or another loved one, including:

  • You want to provide for them during your lifetime
  • You want to organise and/or simplify your estate
  • You are looking for ways to minimise Inheritance Tax on your estate after you die

For most people, the family home is likely to be their most valuable asset, and the one which pushes them over the Inheritance Tax threshold (currently an individual can pass on £325,000 tax free – 2019-20). Estate planning is therefore one of the most common reasons to gift property.

Can I gift my property to anyone?

You can gift your property to whomever you like. Most people want to transfer property to their children or grandchildren, but some choose other relatives or even their close friends. For all transfers, we can provide guidance and handle the process on your behalf.

Can you gift property to reduce Inheritance Tax?

Yes. Lifetime gifting is called a Potentially Exempt Transfer. This means if you gift your property to your children or other loved ones then live another 7 years or more, you will pay no Inheritance Tax on the property after you die.

Unfortunately, if you die within 3 years of the gift, you will incur Inheritance Tax at the normal rate of 40%. For years 3 to 7, the rates of Inheritance Tax will reduce by 8% until it hits 0% in year 7.

The exception to the rules on Potentially Exempt Transfers is if you continue to live in the property. In this situation, you may be regarded as still owning the property after you die, even if you have legally transferred the entire title to someone else, and you may have to pay Inheritance Tax.

If you want to gift your property to your child or grandchild, you should also bear in mind that since 2017, leaving your main residence to your direct descendants provides an additional tax-free benefit. Since April 2019, you can leave your main residence worth up to £150,000 to your direct descendants free from Inheritance Tax. From April 2020, this tax-free allowance will increase to £175,000.

Our expert estate planning team can help you assess whether gifting your property for the purpose of reducing Inheritance Tax would benefit you and whether there are any other tax exemptions or reliefs you could take advantage of.

Can I live in the property once I have gifted it?

Yes, you can gift your home with “reservation of benefit” which will allow you to continue living there. However, it will no longer be a Potentially Exempt Transfer and you will be liable for Inheritance Tax even if you live for 7 or more years after the transfer.

You can get around this disadvantage by entering into a rental agreement with your child and paying rent at the market rate to occupy the property. Your child will have to pay Income Tax on any rental income they receive but this may ultimately be cheaper than Inheritance Tax. We can provide further advice in relation to this.

Do you have to pay Capital Gains Tax if you gift property?

If the property is a second home or a buy-to-let (not your main residence) you will have to pay Capital Gains Tax. This will be at a rate of 18% (for basic rate tax payers) or 28% (for higher rate tax payers) on the difference between the price you paid for the property and its current value. You do, however, have a tax-free allowance of £11,100.

One way you could avoid this is to transfer the property into trust for the benefit of your loved one. If you are interested in this option, one of our specialist Wills, trusts and probate solicitors can provide simple, practical advice.

Can I gift my house to avoid care home fees?

As you grow older, there may come a time when you need to move into long-term residential care. At this time, your local authority will conduct a financial assessment to see how much you can contribute to the fees. The value of your home can be taken into consideration (other than in certain circumstances, such as if your partner or spouse still lives at the property) and it could be sold to pay for your care.

In theory, you cannot gift your property for the sole purpose of avoiding care home fees. If your local authority suspects you have done this, they may take the value of your home into account regardless of the gift. You can gift your property for other reasons. For example, if your child is struggling to get on the housing ladder, you may want to help them by gifting your property. However, there is always a risk the local authority may doubt the gift.

If you are concerned about paying for care and gifting your property, we can provide sensitive advice about your options and the best way to proceed.

Get in touch with our Wills, trusts and probate solicitors today

To set up an initial consultation with our legal experts, get in touch by giving us a call at one of our offices in Grantham, Newark, or Lincoln, or by filling in our online enquiry form.