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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 that you too 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 threshold

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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 allowance (£450,000 in 2018-19 in the UK), 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. 

One exception may be if your relative inherited the assets of their deceased spouse or civil partner, in which case they may have inherited their spouse’s/civil partner’s inheritance tax allowance, granting them up to £900,000. This is called transfer of the nil-rate band.

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 has information about inheritance tax rates and thresholds, 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.

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Gifts with strings attached

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.

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

Last updated: April 2018