Gifting Property to Your Children: What You Need to Know

Why Many Parents Consider It

For many families, the home is their most valuable asset. It’s not surprising that more and more parents are thinking about gifting property to their children - either during their lifetime or in their Will.

In fact, research suggests that 1 in 5 parents in the UK plan to pass property to their children before they die, often to help with housing affordability or to protect assets from future care costs.

But while gifting property sounds simple, the legal and financial consequences can be far more complex than most people realise.

How Can You Gift Property to Children?

There are two main ways:

1. Gifting Property in Your Will

• If you don’t have a spouse or civil partner, you can freely gift your property to your children.

• If you do have a spouse/civil partner, they have prior rights (in Scotland, up to £473,000 in the home they lived in), which can override gifts in your Will.

• You must ensure the property is truly yours to gift. If it’s jointly owned with a survivorship clause, your share will automatically pass to the other owner regardless of what your Will says.

• Leaving property in a Will can also bring inheritance tax relief benefits.

  
  

2. Gifting Property During Your Lifetime

• Some parents transfer property to children while alive, often to avoid future care costs.

• However, once gifted, the property is no longer yours. That means if your child divorces, faces debt, or simply decides to sell—it’s out of your hands.

• Local authorities can challenge gifts made to deliberately avoid care fees. In fact, they can investigate transfers made up to 30 years earlier if they suspect “deliberate deprivation of assets.”

• You may also face Capital Gains Tax (CGT) if the property has increased in value since you bought it.

The Hidden Risks You Need to Weigh

Before deciding, ask yourself:

• Am I ready to give up control?Once the property is in your child’s name, you lose legal rights over it.

• Could my child’s circumstances put the property at risk?Divorce, bankruptcy, or financial troubles could mean your home is sold.

• What about care costs?Around 50% of people over 65 in the UK will need some form of care. Simply gifting your property isn’t a guaranteed shield against fees, and authorities can challenge it.

• Am I prepared for tax implications?If the property has gained value, Capital Gains Tax may apply. While the first £12,300 gain is tax-free, anything above may be taxed at up to 28% (depending on circumstances).

  
  

Sometimes, what seems like a clever solution can end up creating problems for both you and your children.

Safer Alternatives & Next Steps

If you want to protect your property and support your children, gifting isn’t the only option. Many families explore:

• Discretionary Will Trusts - allowing children to benefit when the timing is right, without risking immediate loss.

• Life Interest Trusts - ensuring a spouse can stay in the home while ultimately passing it to children.

• Professional advice - making sure you structure things in a way that’s legally secure and tax-efficient.

Gifting property to your children may seem like an act of love, but it can come with unexpected risks. From losing control of your home to tax bills and challenges from local authorities, it’s a decision that needs careful planning.

Always get professional advice before gifting property - it could be the difference between protecting your family’s inheritance and putting it at risk.