Should I give my house to my children before I die?

In the first of our two-part series, Jonathon Jay of DSW Wealth Planning explains the rules for each and in which scenarios would one option be better than the other?

There is often a debate within families as to whether it is better for parents to hand over their property to their children before they die. The answer will depend on individual circumstances, and you should always seek advice before making a decision.

However, as a general rule, if you gift the property before your death, provided you survive for seven years afterwards and do not continue to live in it, there will be no inheritance tax to pay. Beware that if you do stay in the property, it will be deemed a ‘gift of reservation’ and will be included in your estate on your death, regardless of how much time has passed.

If the property is not your main private residence – for example if it is a holiday home or buy-to-let, capital gains tax would be payable when you transfer ownership just as it would be if you were to sell it. If you were to leave the property in your will, there would be no capital gains tax to pay, just the inheritance tax.

If you have gifted a property and you die within seven years, then inheritance tax would be payable from your estate though the amount is subject to taper relief depending on when you die. It is payable in full for the first three years of the gift being made, but after that the amount is reduced by 20% per year until the seven-year anniversary.

Before making a decision, it is important to consult an accountant and financial planner to understand the tax and financial situation. You should also think about the practical implications too. For example, is it wise to give away a rental property that could provide much-needed income in your later years? And how could transferring ownership of your home to a child or relative affect your long-term security and peace of mind?”

The Financial Conduct Authority does not regulate Inheritance Tax Planning or Business Buy to Let Mortgages.

Important Notes

The above points do not constitute advice and professional advice should be sought before making any important financial decisions.

DSW Wealth Planning is a trading name of Dow Schofield Watts Wealth Planning LLP which is an appointed representative of Corbel Partners Limited which is authorised and regulated by the Financial Conduct Authority.