Can You Give Away Property?

person handing keys to another person

If you are thinking about estate planning, you may be considering whether to give property away to your children or other family members. This is a complex area of law with several issues that you need to be aware of before proceeding.

At Lockings Solicitors, we can talk through your situation with you to make sure that you understand the implications of giving away property and that it is the best course of action for you and your family.

We have in-depth experience in advising clients in respect of estate planning, to include property transfers and related issues such as Inheritance Tax and protecting your own position for the future. If you have any questions, we would be happy to answer them.

Why give away property?

There are many reasons why people choose to give away property, including to help the next generation and to reduce the amount of Inheritance Tax payable by their estate when the time comes. By identifying what you want to achieve in passing on property that you own, you will be able to ensure that this is done in the most efficient way possible and with all of the necessary safeguards in place.

How to give away property that you own

It is crucial that you take independent legal advice before giving away property to ensure that you understand the implications and that your rights and interests are adequately safeguarded.

You should also be of sound mind and the gift should be made of your free will. Your solicitor will be able to draw up the necessary deed of transfer and can also advise as to whether you should consider obtaining a doctor’s letter confirming that you have the necessary understanding to carry out the transfer. 

The property should be free of mortgage and other debts when it is transferred and you should be the registered owner at HM Land Registry.

Should I give away my property completely or retain an interest in it?

One of the first decisions you need to make is whether you intend to give away your property completely or retain an interest in it. If you give it to your children but continue living there, either for free or at a reduced rent, you will be held to have a retained interest in it and this will have Inheritance Tax implications in due course.

If you give away your property completely and either move out or pay a full market rent, then this will show to HM Revenue & Customs in due course that you did not retain a financial interest.

Giving away property while continuing to live there

If you wish to keep living in the property after you have gifted it, then precautions need to be taken to ensure that you can stay there. Without the right legal framework in place, there is a risk that you could be required to leave at some point if something unforeseen happened or if you were to fall out with the property owner.

You could enter into a formal lease with the new property owner, but you should be aware that you would not have any more rights than any other tenant and there is a chance you could be given notice to leave.

Alternatively, you could put the property in trust so that you have the right to live there during your lifetime. There are tax implications with this option, so you should ensure that it is right for your circumstances before going ahead.

Giving away a second home

If the property that you will be giving away is a second home, then Capital Gains Tax will be payable when you gift it, based on the increase in value from when you bought it. This will be based on the market value of the property as at the date it is gifted. 

If the property will be a second home for the person receiving it, they will also be liable for Capital Gains Tax in due course if they sell as well as Income Tax on the rental income.

If I give away my property, will my estate have to pay Inheritance Tax on its value?

The main reason for giving away property is often so that your estate will not have to pay Inheritance Tax on its value. When you gift a property, you need to survive for seven years from the date of the gift for your estate to avoid Inheritance Tax.

If you were to die during the seven-year period after the property was gifted, Inheritance Tax would be payable by your estate on a sliding scale.

Inheritance Tax is usually payable at 40% on assets in an estate over £325,000. If your spouse’s estate did not use their Inheritance Tax allowance of £325,000, then this can be transferred so that there is a potential total tax-free allowance for a couple of £650,000.

If a property is left in your Will to your direct descendants, such as children or grandchildren, then a further £175,000 allowance is added for both you and your spouse, meaning that as a couple you could potentially leave £1 million without paying Inheritance Tax.

If you give property away during the last seven years of your life, then Inheritance Tax will be payable as follows:

Years between gift and death Rate of tax on the gift

Up to 3 years 40% – ie. no reduction

3 to 4 years 32%

4 to 5 years 24%

5 to 6 years 16%

6 to 7 years 8%

7 or more 0%

Giving away property to avoid care home fees

By law, you cannot give away your assets to avoid or reduce the amount of care home fees that might be payable in the future. If you need to move into care, the local authority will look at your financial situation to see whether it believes there has been deliberate deprivation of assets. If so, you will be charged fees as if you had not given away your property or other assets.

The local authority also has the power to cancel a transfer or pursue other individuals for the return of the money.

You do have the right to protect your share of a jointly owned property from being used to pay the other owner’s care fees however. This is done by owning a property as tenants in common, which means that you can leave your share of your home in your Will to your choice of beneficiary. You can leave your spouse a life interest in the home so that they can stay there as long as they wish, but the local authority will not be able to take your share into account when assessing their means.


Contact our property and estate planning solicitors in Beverley, Hull and York


Estate planning is a complex area and you are advised to take legal advice from an expert in deciding how best to structure your financial affairs for the future. 

At Lockings Solicitors, we have experience across the full range of estate planning options and we can discuss your situation with you and advise you of the best way to protect your assets for you and your loved ones.

If you have any property or estate planning questions that you would like to ask one of our East Yorkshire legal team, ring us on 01482 300 200, email us at or fill in our contact form and we will call you back promptly for a FREE initial chat.

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