You can give your home to your children - or someone else - at any time, even while you're still living in it. But there are complex rules to be aware of, so always seek independent financial advice.

On this page you can find information on

1. Inheritance tax
2. Sharing a home
3. Gifts with strings attached
4. Gifting a home

The information on this page is written with relatives and friends of elderly people in mind. We are aware, too, that you you might be looking for advice about legally transferring your own property, but for the sake of simplicity we refer to ‘you and your relative’ on this page.

Inheritance tax

If your relative gives their home to their children, but passes away within seven years, the value of the property can still be included in their total estate. If their total estate (including their home) is worth more than the inheritance tax threshold (£325,000 in 2016-2017) and no transferrable nil rate band is available from the estate of a predeceased spouse or registered civil partner, the Government will take 40% of the value of the estate in excess of the available threshold in inheritance tax, reducing the amount that goes to beneficiaries. 

However, if your relative lives for seven years after gifting the house (no matter what it’s worth), it will not be included in their estate for the purposes of inheritance tax.

Which? Money more has information about inheritance tax thresholds and rates, as well as the rules for married couples and civil partners.

Sharing a home

If your relative gives half of their home to their children, who then move in and share the bills, the half that they have given away won't be treated as part of the estate for inheritance tax purposes - as long as your relative lives for seven years after making the gift.

Gifts with strings attached

Get a Will from Which?

If you are involved with helping your relative manage his or her financial affairs, perhaps now is a good time to be thinking of making a will for yourself if you haven’t done so already. Make sure your treasured possessions go to the ones you love – see how we can help at Which? Wills.

If a person gives their home to their children with conditions attached to it, or continues to benefit from the home by living in the property, this is known as a 'gift with reservation of benefit'. This means that the gift will still be included as part of their estate for inheritance tax purposes when they die, even if they live for seven years after making the gift.

For more details about inheritance tax, read this page in the Which? money guide.

Gifting a home 

Your relative could make social visits to the home that they gave away, and stay for short periods. But there are guidelines as to how frequent the visits can be without the home again becoming a 'gift with reservation of benefit' (see ‘Gifts with strings attached’, above).

Your relative could continue to live in their home after giving it away, provided that they pay a market rent to the new owner. Bear in mind that the new owner may have to pay income tax on the rent they receive.

If your relative lives in the home without paying market rent, the gift will be considered a 'gift with reservation of benefit', and the house may be included as part of their estate for inheritance tax purposes.

More information

Page last reviewed: 30 November 2015
Next review due: 28 February 2017