There are three taxes to consider when you give your property away during your lifetime: Inheritance Tax, Capital Gains Tax and Stamp Duty Land Tax. Inheritance tax The gift will ONLY be exempt from IHT if you survive seven years from the date of the gift. If you pass away within three years, then the full 40% IHT will be payable on the property’s value. Survive more than three but less than seven years, and the IHT rate tapers on a sliding scale. Gift with a reservation of benefit There are some exceptions to this rule. If you retain an interest in the property – for example, you continue to live in the home rent-free – then you are making a “Gift With a Reservation of Benefit.” HMRC will not recognise a gift with a reservation of benefit and the property will be included in the estate when calculating the IHT bill. For a gift to be treated as a genuine gift, you must leave your home forever (as if you had sold it) or pay market rent (in which case your child will have to pay income tax on the rent they receive). For many families, the gift is less appealing when you take the tax consequences into account. It’s important to ask your solicitor whether such an arrangement would suit your individual circumstances. Capital Gains Tax If you give away your main home to your children, there should be no capital gains tax to pay. However, if you give away a second home or rental property, then capital gains tax will be payable on any profit arising at the time of the gift. HMRC will look at the market value of the property when the gift is made. If this is higher than when you bought the property, you will pay CGT on the uplift at 18% or 28%, depending on your income for that tax year. If you have not already used your annual CGT exemption, the first £12,300 of gain is tax-free. Stamp Duty Land Tax Stamp duty should not be payable if it’s a genuine gift and no money changes hands. However, it may be payable if there is a mortgage or some other attached to the property, or a price is paid. These are complicated transactions. Your solicitor can advise you on the implications and whether Stamp Duty Land Tax should be paid or not.