Legal Advice for Gifting Property & Deed of Gift

Gifting a property can be a powerful way to offer practical help to children, grandchildren or other relatives especially at a time when housing costs make it harder than ever for younger generations to get started. Rather than leaving the asset as part of an estate, a lifetime gift allows you to see your loved ones benefit from it now.

Property is often the most valuable asset within an estate, and gifting it can reduce the overall value of your estate for IHT purposes. If you survive for seven years after making the gift and you do not continue to benefit from the property, the gift may fall entirely outside your estate for tax calculations. This is known as a Potentially Exempt Transfer (PET) and is a commonly used method in estate planning.

Gifting part of a property can also be useful when restructuring ownership between spouses or cohabiting family members. This might form part of succession planning, a divorce settlement, or simply a decision to bring another family member into co-ownership.
 

In certain circumstances, clients choose to gift their home to children or a trust to safeguard the asset, for example, against future claims or to ensure it is passed down a specific bloodline. While there are legal risks to consider (especially around bankruptcy, divorce, and care home fees), structured correctly, it can offer long-term peace of mind.

Gifting your property during your lifetime can reduce the size of your estate for Inheritance Tax purposes, but only if certain conditions are met.

Most gifts of property are treated as Potentially Exempt Transfers (PETs). This means they are free from IHT as long as you live for seven years after making the gift. If you pass away within that seven-year period, some or all of the gift's value may be brought back into your estate for IHT calculation, with taper relief potentially applying after year three.

However, if you continue to live in the property without paying full market rent, HMRC may consider that you have reserved a benefit from it. In that case, the gift will not be exempt from IHT, even if you live another seven years, the property could still be treated as part of your estate.

We can help you explore options such as formal rental agreements to ensure the gift qualifies for the full exemption, while still allowing you to stay in your home if desired.

If the property you're gifting is not your main residence for example, a second home or a buy-to-let, Capital Gains Tax may be payable when the gift is made.

Gifts between connected parties, such as parent and child, are treated as if the property were sold at full market value. This means CGT could apply to any increase in value since you acquired the property.

If required, we have a network of trusted accountants who can provide specialist advice on Capital Gains Tax.

Some clients consider gifting their home to avoid it being sold to pay for long-term care. However, local authorities are allowed to investigate past gifts when assessing eligibility for financial support. If they believe the property was given away specifically to avoid care fees, known as deliberate deprivation of assets, they can treat you as still owning it and may take steps to recover the value.

There is no time limit for such investigations, and outcomes depend heavily on the intention behind the gift at the time it was made. At Rowlinsons, we offer honest, sensitive advice about how a property gift may be viewed in the future and help you make decisions with clarity and confidence.

Once you gift a property, it becomes part of the recipient's estate. If they later face divorce, bankruptcy, or financial claims, the property could be at risk even if you're still living there.

We’ll advise you on safeguarding measures, such as placing the property into a trust, entering into declarations of trust, or drafting co-ownership agreements. If you're gifting to children or more than one family member, we'll help structure the transfer in a way that preserves family harmony and legal clarity.

Yes, you can continue living in the property, but there are important tax implications. If you gift your home and remain living there without paying full market rent, HMRC may view it as a gift with reservation of benefit, meaning the property will still count as part of your estate for Inheritance Tax purposes. We can advise you on putting a rental agreement in place or explore alternative options that protect your interests and minimise tax exposure.

Capital Gains Tax (CGT) may apply if the property is not your main residence, for example, if it’s a buy-to-let or holiday home. Gifts to connected parties, like children, are treated as if sold at market value for CGT purposes. If it’s your primary residence, Private Residence Relief may apply. We can introduce Capital Gains Tax specialists to provide advice if needed.

Not necessarily. Local authorities can look into property gifts made years before care is needed. If they believe the gift was made to avoid paying for care, known as deliberate deprivation of assets, they may still treat the property as part of your capital. We’ll offer honest, straightforward advice on the risks involved and explore other ways to structure your estate.

Yes, you can gift a share of your property, for example, transferring 50% ownership to a child. In this case, we’ll update the Land Registry records and ensure the right co-ownership structure is in place (e.g. joint tenants or tenants in common). We’ll also advise on your rights of occupation and any future tax or legal consequences.

Generally, Stamp Duty is not payable when a property is gifted outright and no money or mortgage is involved. However, if the recipient takes on part of an existing mortgage, SDLT may be payable based on the value of that debt. We’ll review your situation and let you know exactly what applies.

Once gifted, the property becomes part of the recipient’s estate. This means it may be at risk if they later divorce, go bankrupt or face other financial claims. To help safeguard the asset, we can explore the use of trusts, co-ownership agreements, or pre/post-nuptial planning, depending on your circumstances.

We begin by discussing your objectives and reviewing the property you wish to gift. This includes checking the title at HM Land Registry, identifying any existing charges (such as a mortgage), and assessing potential tax and legal implications. We'll also advise on whether the gift could affect your ability to continue living in the property or impact your future estate planning.

If needed, we'll coordinate with our in-house experts in Wills, trusts and tax planning to provide joined-up advice that covers every angle.

We'll prepare a formal Deed of Gift, also known as a deed of transfer without consideration. This legal document sets out the full details of the gift, including:

- The names and addresses of both you (the donor) and the recipient (the donee)
- A clear description of the property
- Confirmation that the transfer is a genuine gift, made voluntarily, and with no payment or conditions
- A declaration that you understand the implications and are acting of your own free will
- To be valid, the deed must be signed and witnessed by an independent adult who is not a relative or beneficiary of the gift.

Once the deed has been signed and witnessed, we'll arrange for the transfer of ownership to be registered at HM Land Registry. This is a key step to ensure the legal title is formally updated to reflect the change.

If you're gifting only a share of the property, or if the recipient is being added to the title, we will also advise on how the property will be held, for example, as joint tenants or tenants in common, and prepare any necessary declarations of trust.

We'll help you decide whether to update your Will to reflect the gift and review any future implications such as tax planning, care costs, or protecting your continued right to occupy the property. If you intend to stay in the property after gifting it, we can advise on the best way to document this, including rental agreements or rights of residence.

From start to finish, we'll keep you informed, handle all the paperwork, and ensure the process is smooth, secure, and fully compliant with the law.