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.
What is transfer of equity?
A transfer of equity is when a share of equity is transferred to one or more people, but the original owner remains on the title deeds.
You’ll need a conveyancing solicitor to complete the legal requirements of a transfer of equity. These include Land Registry forms and charges. Your conveyancer can also advise you on the best options for your circumstances.
You may also need to speak to your mortgage lender if you have an outstanding mortgage on the property. They will need to confirm that the mortgage will still be affordable with another person added to the title deeds.
Stamp Duty
If you are the person taking on the equity and possibly part of an existing mortgage, you may have to pay Stamp Duty Land Tax (SDLT).
You’ll usually 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 pay tax on any amount above that threshold.
To learn more about the process and likely fees, read our guide to transferring equity costs.
Divorce or dissolution and transfer of equity
If you are divorcing or dissolving a civil partnership, you will not usually have to pay Stamp Duty on the equity transfer.
Capital Gains Tax
Capital Gains Tax after separation can be more complicated. You will not usually have to pay Capital Gains Tax if you lived together during the tax year in which the asset was transferred. In the UK, the tax year runs from 6 April to 5 April the following year.
You’ll also need a valuation of the asset on the date of transfer 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 cannot legally own property. In that case, the equity would usually be held in trust until they turn 18.
A solicitor can help arrange this for you.
Transferring property to your children
You might want to transfer a share of your property to a child for several reasons. For example, you may want to help them get onto the property ladder. You may also want to reduce a future Inheritance Tax bill while continuing to live in the property.
A transfer of equity may be the right option in this situation. The process is broadly similar to transfers between spouses.
If the equity or mortgage being taken on is over £250,000, your children may have to pay Stamp Duty on their 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 whole property. Because of this, the property automatically passes to the other owner or owners if one person dies. This is a common arrangement for married couples.
In a transfer of equity, you would usually transfer 50% of the property to your partner if you want equal ownership.
Tenants in common means you can own different shares of the property. The property does not automatically pass to the other owner if you die, but you can leave your share in your will.
This arrangement may be more suitable if you want your child on the title deeds but do not want them to own the property as a joint tenant with you.
You can also switch between tenants in common and joint tenants. This often happens during divorce, where separating couples may prefer to hold the property as tenants in common.
Gifting
Gifting property to your children
The most common way to transfer property to your children is by gifting it. This is often done to reduce the amount of Inheritance Tax payable when you die. Inheritance Tax is charged at 40% on estates above £325,000.
You and your partner may be able to combine allowances, potentially increasing the threshold to £650,000. Parents with estates above this level may want their child to inherit as much as possible.
Your children may reduce or avoid Inheritance Tax if you live for another seven years after making the gift, provided you do not continue to benefit from the property as if you still owned it. The tax reduces on a sliding scale between years three and seven.
Read more in our guide to will-writing and inheritance tax.
If you die between three and seven years after gifting the property, your children may still have to pay tax, but not the full 40%. This is known as taper relief.
What is a gift with a reservation of benefit?
A gift with reservation of benefit is when you give away a property but continue to benefit from it. For example, if you gift a property and continue living there rent-free, it will not usually be exempt from Inheritance Tax. To avoid this, you would normally need to pay a market rent for living there.
Gifting property to a spouse/civil partner
If spouses or civil partners want to transfer assets between themselves, it can often make sense to do this as an outright gift.
For example, one spouse may own a property but want to protect the other spouse’s right to it. They could transfer 50% of the property as a gift.
Because it is a gift, unlike a transfer of equity, no money changes hands.
You will not usually be charged Capital Gains Tax or Stamp Duty on this type of gift where it is made between spouses or civil partners.
What forms do you need to gift a property?
Even where gifting seems straightforward, transferring a property usually involves completing formal paperwork.
Deed of Gift/Transfer of Gift form
To transfer a property to a family member as a gift, a Deed of Gift form usually needs to be completed. This is sometimes referred to as a Transfer of Gift.
TR1/TP1 form
When transferring property to a family member, a TR1 form is generally used for a transfer of full ownership. If you are only transferring part of your interest so that someone becomes a joint owner, you may need a TP1 form instead.
AP1 form
An AP1 form is then usually required to update the property details at HM Land Registry.
What are the requirements for giving property as a gift?
There are several requirements for executing a Deed of Gift to protect both the donor and the donee. These include:
- The transfer must be made freely and without pressure. The donor must be of sound mind and able to make the decision.
- There should be no outstanding debts secured against the property, unless these are being dealt with as part of the transfer.
- The owner must be listed in the Land Registry proprietorship register.
It is important to seek legal advice before proceeding with a Deed of Gift.
Risks of gifting
It is important to understand the risks of gifting property to family members. Discussing these with a solicitor can help you decide whether gifting is the right option.
Risks of gifting property to children
Transferring or gifting property to your children can mean giving up ownership rights. This may not always be a problem, but it can leave you in a vulnerable position.
For example, family relationships can change, and your children may have the legal right to ask you to leave the property.
There is also a risk that if your child separates from a spouse or partner, the property could become part of a divorce settlement and be sold against your wishes.
Risks of gifting property to your spouse
Gifting a share of your property outright means no money changes hands. The person making the gift gives up the share they have transferred.
This means they no longer have financial control over that share. In many marriages this may not matter, but it is still worth considering carefully.
For example, you and your partner may need to update your wills to make sure the property passes back to you if your spouse dies first.
Gifting and Capital Gains Tax
Capital Gains Tax (CGT) is a tax on the profit made when an asset increases in value. The profit is usually the difference between the property’s value at the time it is gifted and the amount originally paid for it.
If you are gifting a property that is not your main home, such as a buy-to-let or holiday home, you may have to pay CGT. It may also apply where the person receiving the property does not live there as their main residence and later sells it at a gain.
The annual CGT allowance for 2024 to 2025 is stated here as £3,000.
If you are concerned about the tax consequences of giving away property, it is a good idea to speak to a conveyancing solicitor.
Transferring Property Ownership to Family Members FAQs
Do I need a solicitor to transfer ownership of a property?
It is not a legal requirement to use a solicitor when transferring property ownership, but it is usually a good idea. Some of the forms involved may need to be witnessed by a legal professional, so having a solicitor involved can make the process easier.
Transferring equity can be complex. A solicitor can help with Stamp Duty, Capital Gains Tax, Inheritance Tax, and registration at HM Land Registry.
Without experience of these procedures, handling the transfer yourself can be daunting and complicated. For peace of mind, it is often best to seek professional advice.
How long does it take to transfer your property to family?
Transferring property to a family member can take time because it involves several legal steps. In many cases, the process takes between four and twelve weeks.
During this time, your conveyancer may need to deal with matters such as searches, contracts, lender requirements, and Land Registry registration.
What are the steps for transferring property ownership to family members?
Transferring property ownership to a family member usually involves these key steps:
- Decide whether the transfer will be a gift or a sale.
- Get the property valued and complete the necessary legal documents, usually with the help of a solicitor.
- Submit the completed documents to HM Land Registry to record the transfer officially.
Can I gift property to my children?
Yes, you can gift property to your children. This usually involves legally transferring the property title to them, often with the help of a solicitor. You should also consider possible tax consequences, including Inheritance Tax and Capital Gains Tax.
Is it possible to sell my house to my son for £1?
Technically, yes, but it is not straightforward. For tax purposes, this may still be treated as a gift, and Capital Gains Tax may apply. It is best to get advice from a solicitor based on your specific circumstances.
How can I transfer property from my husband to myself in the UK?
To transfer property from your husband to yourself, you will usually need to complete a transfer of equity and may need to consider Stamp Duty Land Tax depending on the value involved and whether a mortgage is being transferred.
Legal advice is recommended to make sure the process is handled correctly.
What are the considerations for gifting my house to my children?
When gifting your house to your children, think about the possible Inheritance Tax and Capital Gains Tax implications. You should also consider your future living arrangements, as continuing to benefit from the property can affect the tax position.
How do I pass my house to my child?
To transfer property to your child, you will usually need a deed of transfer, signatures that are properly witnessed, and registration of the transfer at HM Land Registry.
It is sensible to get legal advice so you understand both the process and the tax implications.
Can I transfer property to my child without paying taxes in the UK?
Completely avoiding tax when transferring property to your child can be difficult. If you survive for seven years after making the gift, the property may fall outside your estate for Inheritance Tax purposes.
For Capital Gains Tax, you will need to check whether 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. You can own it as joint tenants, where you both own the whole property together, or as tenants in common, where each of you owns a separate share.
How do I transfer a house to a family member?
To transfer a house to a family member, you will usually need a deed of transfer, proper signatures and witnessing, and registration of the change at HM Land Registry.
It is worth consulting a solicitor to make sure all legal and tax issues are dealt with properly.
Can I put my child’s name on my house deeds in the UK?
Yes, you can put your child’s name on your house deeds. This is often done through a transfer of equity. Legal advice is recommended so you understand the implications, including possible tax liabilities.
Compare quotes for legal experts who can help you transfer equity to a family member.
How do I transfer property to a family member tax-free in the UK?
Transferring property entirely tax-free can be complicated. One possible way to reduce Inheritance Tax is to survive for seven years after making the gift. For Capital Gains Tax, you will need to check whether any exemptions or reliefs apply.
Professional advice is strongly recommended for any transfer of this kind.
What is the 7-year rule for gifting property?
For Inheritance Tax purposes, the seven-year rule means that no tax is usually due on gifts if you live for seven years after making them.
If you die within those seven years, Inheritance Tax may still be due on the value of the gift above the £325,000 threshold. The amount may reduce on a sliding scale if you die between three and seven years after making the gift. This is known as taper relief.
- 3 to 4 years: 32%
- 4 to 5 years: 24%
- 5 to 6 years: 16%
- 6 to 7 years: 8%
Do you pay stamp duty when transferring property to family?
You may need to pay Stamp Duty when transferring property to family if the property has a mortgage and the person receiving it is taking on part of that debt.
However, if the property is gifted and there is no chargeable consideration, Stamp Duty does not usually apply.
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