Transferring property to your spouse/civil partner
If you're newly married and want your spouse on the title deeds, you may want to transfer ownership of a property. You can do this through a transfer of equity.
This is where a share of equity is transferred to one or multiple people, but the original owner stays on the title deeds.
You’ll need a Conveyancing Solicitor to complete the legal requirements for you in a transfer of equity. These include Land Registry forms and charges. You'll also get advice on the best options for you during your transfer.
You might also need to consult with your mortgage lender if you have an outstanding mortgage on your property. They will need to check the mortgage will still be paid with an extra person coming onto the title deeds.
Perhaps you are the party taking on the equity and possibly part of an existing mortgage. If so, you may have to pay Stamp Duty Land Tax (SDLT).
You’ll have to pay stamp duty if the equity and mortgage you take on is over £250,000. This is the current government threshold. You’ll then have a tax charge on any of the equity over this threshold.
To learn about the process and transferring equity fees, read our article on thetransferring equity costs.
Divorce or dissolution and transfer of equity
If you aredivorcingor dissolving a civil partnership, you won't have to pay stamp duty on the equity transfer.
Capital Gains Tax after separation is slightly more complicated. You won't have to pay Capital Gains Tax if you lived together during the tax year that the asset was transferred. The tax year in the UK runs from the 6th April to the 5th April of the next year.
You’ll need to get a valuation of the asset on the date of the transfer to for tax purposes.
How to pass on your house and money to your child
You can either transfer or gift your property to your children.
It is important to note that children under the age of 18 are not legally able to own property and therefore the equity will be held under a trust which will become available to them when they turn 18.
A solicitor can process this for you.
Transferring property to your children
You might want to transfer a share of your property to a child for a few reasons. For example, you may want to give them a foot-up on the property ladder. Itmight also be that youwant your children to avoid Inheritance Tax (IHT), but you alsowant to remain living in the property.
A transfer of equity might be the right option for you if this is the case. The transfer of equity process is the same as transfers between spouses.
If the equity/mortgage is over £250,000, your children will have to pay stamp duty on their received share.
Joint tenants or tenants in common?
When owning a property with someone else, you can either be joint tenants or tenants in common.
Joint tenants have equal rights to the property. Because of this, the property automatically goes to the other owner(s) of the property if you die. This is a common option used for married couples with their jointly owned property.
In a transfer of equity, you’ll need to transfer 50% of the property to your partner.
Tenants in common means you can own different shares of the property. But this does not mean that the property will automatically go to the other owners if you die. You can, however, pass on your share of the property in your will.
This could be used if you wanted your child on the title deeds but did not want them to be joint tenants with you.
You can also switch between being tenants in common and joint tenants. This is common during a divorce, where you may want to become tenants in common rather than joint tenants.
Gifting
Gifting property to your children
The most common way to transfer property to your children is through gifting it. This is usually done to ensure they will not have to pay inheritance tax when you die. Inheritance tax starts at 40% and applies to any property you own over £325,000.
You and your partner can combine your assets, so it starts at £650,000. Parents with property over this value want their child to receive as much of it as possible.
Your children can reduce the amount of inheritance tax (or avoid it) if you live for another 7 years after gifting the property. This is as long as you haven't lived or benefited from it as a primary householder might. For every passing year, up to seven years, the amount of tax tapers off.
Find out more in our guide'Will-writing and inheritance tax'.
If you die between 3 and 7 years after gifting your property, your children will still have to pay tax, but not the full 40%. This is known as ‘tapered relief’.
What is a gift with a reservation of benefit?
A gift with reservation of benefit refers to when you gift a property, but you continue to benefit from the gift. After you have gifted the property, you will not be able to live there rent-free. If you do, your property will not be exempt from Inheritance Tax. Instead, you must pay rent in line with the average rate in the area.
Gifting property to a spouse/civil partner
If spouses and civil partners want to transfer assets between them, it often makes sense to do this as an outright gift. For example, a husband might own property but want to protect his wife's right to it. He would be able to transfer 50% of the property as a gift.
As it is a gift, unlike a transfer of equity, the husband would not receive any money from this transfer.
You will not be charged Capital Gains Tax or Stamp Duty on this gift. This is because it is between a married couple or a civil partnership.
What forms do you need to gift a property?
As simple as gifting can usually be, transferring a property will require you to fill in some forms. To transfer a property to a member of your family as a gift, a Deed of Gift form will need to be completed. This is sometimes called a Transfer of Gift.
When you transfer property to your family, a TR1 form will need to be filled out. The TR1 form is applicable to transfers of complete ownership. If you're only planning on transferring part of your estate to become a joint owner, you'll need a TP1 form.
From there, an AP1 form will need to be filled in to change the property's details in the Land Registry.
What are the requirements for giving property as a gift?
There are some criteria for executing a Deed of Gift that need to be met to protect both the Doner and the Donee. These include:
- The transfer of property should be done at the Donor’s free will and they should be under no pressure to gift the property. The Doner should be of sound mind and able to make the decision.
- There should be no outstanding debts against the property
- The owner is listed in the Land Registry’s proprietorship register
It is important to seek legal advice before executing a Deed of Gift.
Risks of Gifting
To Children
Transferring or gifting property to your children can remove you as a homeowner. This means you'll lose rights to the property. Usually, this isn't a problem, but it may put you in a vulnerable position.
Sometimes you may fall out with your family, and your children have the legal right to evict you.
Alternatively, your children may have fallen out with their spouse. This could mean the property is sold against your family’s wishes if it becomes part of a divorce settlement.
To your spouse
Gifting outright means that no money changes hands. The spouse gifting part of a property will lose the share they have gifted.
This means they won’t have financial control over that share. Usually, in a marriage, this will not matter, as money and property are often in practice shared equally. However, you may want to think whether this is the right choice for you.
For example, you and your partner's wills may need amending. This is to ensure that the property goes back to you if your spouse dies.
Gifting and Capital Gains Tax
Capital Gains Tax (CGT) is a tax you pay on the ‘profit’ you make on the property. The profit is the difference between the value of the property when gifted and the purchase price. For basic-rate taxpayers, it is charged at 18%. For higher-rate taxpayers, it is charged at 28%.
If you are gifting a property which isn’t your main residential property, you may face a Capital Gains Tax (CGT). This applies to the property you have bought to rent out, and holiday homes. It could also apply if the child or partner is not living at the property when you gift it to them. But the property increases in value by the time they sell it.
There is a tax allowance, after which you will have to pay CGT. For 2023-24this is £6000.
If you're concerned about giving away your property, it's a good idea to talk to a Conveyancing Solicitor.
Do I need a solicitor to transfer ownership of a property?
It isn't required for you to have a solicitor when transferring property ownership. However, it's a good idea to have one. Some forms involved in the transfer process will need to be witnessed by a legal professional anyway. So, it's best to have a solicitor on hand.
Transferring equity can be a complex process. A solicitor will help you with stamp duty, capital gains tax, and inheritance tax. They'll also support you by registering you with the Land Registry.
Without ample experience in these procedures, transferring a property on your own can be a daunting, complicated task. For peace of mind, we advise you to get in touch with a legal professional.
How long does it take to transfer your property to family?
We understand that when transferring property to family, you don't want it to take too long. Property transference can be a complicated process. Usually, the transfer can reach completion after 4 to 12 weeks.
In between these weeks, it's important to understand that certain procedures have to be met. A conveyancer needs time to finish the transfer because of things like property searches, contract exchanges, and registration.
Transferring Property Ownership to Family Members FAQs
What are the steps for transferring property ownership to family members?
Transferring property ownership to family members involves a few key steps.
Decide on the type of transfer – whether it's a gift or sale.
Get the property valued and complete the necessary legal documents, typically with the help of a solicitor.
Submit these documents to the Land Registry to officially record the transfer.
Can I gift property to my children?
You can gift property to your children. This process involves legally transferring the property title to them, often requiring the services of a solicitor. Be aware of potential tax implications, such as Inheritance Tax and Capital Gains Tax.
Is it possible to sell my house to my son for £1?
Technically, you can sell your house to your son for £1, but it's not straightforward. This transaction is considered a gift for tax purposes, and you might face Capital Gains Tax. It's best to consult a solicitor for advice tailored to your situation.
How can I transfer property from my husband to myself in the UK?
To transfer property from your husband to yourself, you'll need to complete a 'Transfer of Equity' form and potentially pay Stamp Duty Land Tax, depending on the property's value.
Legal advice is recommended to ensure the process is handled correctly.
What are the considerations for gifting my house to my children?
When gifting your house to your children, consider the potential Inheritance Tax and Capital Gains Tax implications. Also, think about your living arrangements post-transfer, as this could affect your tax liabilities if you are seen to be benefiting from the gift.
How do I pass my house to my child?
To transfer property to your child, you'll need to complete a deed of transfer, have it signed and witnessed, and then register the transfer with the Land Registry.
It's advisable to seek legal advice to navigate the process and tax implications.
Can I transfer property to my child without paying taxes in the UK?
Avoiding taxes entirely when transferring property to your child is challenging. However, if you survive for seven years after the gift is given, the property might be exempt from Inheritance Tax.
For Capital Gains Tax, consider if any exemptions or reliefs apply.
What is parent-child joint ownership of a house in the UK?
Parent-child joint ownership means both you and your child are legal owners of the property. This can be as 'joint tenants' where you both own the entire property together, or 'tenants in common' where you own separate shares.
How do I transfer a house to a family member?
To transfer a house to a family member, you'll need to complete a deed of transfer, have it signed and witnessed, and then register the change with the Land Registry.
Consider consulting a solicitor to ensure all legal and tax aspects are covered.
Can I put my child's name on my house deeds in the UK?
You can put your child’s name on your house deeds. This is typically done through a process called 'Transfer of Equity'. Legal advice is recommended to understand the implications, including potential tax liabilities.
Compare quotesfor legal experts to help you transfer equity to a family member.
How do I transfer property to a family member tax-free in the UK?
Transferring property tax-free is complex. One way to potentially avoid Inheritance Tax is to survive seven years after gifting the property. For Capital Gains Tax, check if any reliefs apply. Always seek professional advice for your specific situation.
What is the 7-year-rule for gifting property?
In relation to inheritance tax, the 7-year-rule means that no tax is due on gifts you give if you live for 7 years after giving them.
If you die within these 7 years then there will be inheritance tax to pay on the value of the gift over the £325,000 threshold. However, this is reduced on a sliding scale if you die in the 3-7 years after.
This is called taper relief.
| Years between gift and death | Rate of tax on the gift |
|---|---|
| 3-4 years | 32% |
| 4-5 years | 24% |
| 5-6 years | 16% |
| 6-7 years | 8% |
Do you pay stamp duty when transferring property to family?
You will need to pay stamp duty on the transfer if the property is mortgaged.
However, if the property is gifted and there is no chargeable consideration, stamp duty does not usually apply.
Updated April 2024
