Guide

Gifting Property to Your Children: Capital Gains Tax, Inheritance Tax and the 60-Day Return

Written by James Whitfield · Last checked 18 October 2026 Checked against GOV.UK and HMRC guidance

Quick answer

Giving a property to your son or daughter is treated as selling it at market value, so Capital Gains Tax is due on the rise in value even though you receive nothing.¹ For a buy-to-let or second home, that means 18% or 24% on the gain above your £3,000 allowance in 2026/27, reported and paid within 60 days of the transfer.² Your own main home is usually covered by Private Residence Relief, but inheritance tax rules still apply if you keep living there.

Key facts

Gifts to a spouse, civil partner or charity are the only gifts free of CGT. Children, parents, siblings and unmarried partners are all taxed at market value.¹
Gift Hold-Over Relief is for business assets and unlisted trading-company shares, not let residential property.³
For inheritance tax the gift is free if you survive 7 years, unless you keep benefiting from it, for example by living there rent-free.⁴
Your child takes the property at its market value on the date of the gift, so their own future gain starts from there.
2026/27 CGT rates on residential property: 18% within your unused basic-rate band, 24% above it.⁵

Why is a gift taxed when no money changes hands?

A gift is a disposal for CGT, and because you and your child are "connected", the law replaces whatever was paid with the property's market value.¹ The same applies if you sell to your child for less than it is worth: selling a £300,000 flat to your daughter for £150,000, or for £1, is taxed as if you received £300,000.

That is why the biggest practical problem is cash: you owe tax within 60 days on proceeds you never received. Plan how you will pay before the transfer.

Worked example: giving a buy-to-let flat to a daughter

Linda bought a flat in 2010 for £140,000, with £3,000 of purchase costs. In December 2026 she gives it to her daughter. A RICS valuer puts its market value at £260,000; the valuation and legal work on the transfer cost £1,700. Linda's pension income is £30,000, leaving £20,270 of basic-rate band (£37,700 − £17,430).

CGT on Linda's gift, 2026/27

Market value at the date of the gift (deemed proceeds)	£260,000
Less purchase price and purchase costs	−£143,000
Less valuation and legal costs of the gift	−£1,700
Gain	£115,300
Less annual exempt amount	−£3,000
Taxable gain	£112,300
£20,270 at 18%	£3,648.60
£92,030 at 24%	£22,087.20
CGT due within 60 days of the transfer	£25,735.80

Her daughter's base cost is £260,000. If Linda's husband had owned half, each would pay on half the gain with their own allowance and band: see CGT between spouses.

Before you pay HMRC, check every cost, loss and relief is in your figures: get your CGT Check report, £4.99 →

Does a property gift need a 60-day return?

Yes, if it is UK residential property and there is CGT to pay. The return asks for the market value instead of a sale price; the date the transfer completes starts the 60 days.² Keep the valuation report: HMRC can ask how the figure was reached, and an unrealistically low value is the most common point of challenge.

Follow our step-by-step guide to the 60-day return, and check the costs you can deduct.

Can you avoid or defer the CGT?

Your main home: if Private Residence Relief covers the whole period, there is no CGT on the gift.
Business assets: Gift Hold-Over Relief lets the gain pass to your child, claimed jointly with them, but only for assets used in your trade or shares in an unlisted trading company. A let house does not qualify.³
Gifts into a trust: a gift into most trusts can be held over for CGT because it is immediately chargeable to inheritance tax. Above the £325,000 nil-rate band that means a 20% inheritance tax charge on the way in, so this needs professional advice.
Gift a share over several years: giving part of the property in different tax years uses more than one £3,000 allowance and spreads the gain across more basic-rate bands, but each part is still a disposal at market value with its own return.

How does inheritance tax treat the gift?

An outright gift to a child is a potentially exempt transfer. If you live for 7 years afterwards, it falls outside your estate. If you die within 7 years and your gifts in that period exceed the £325,000 nil-rate band, tax on the gift is reduced on a sliding scale from the third year: 32%, 24%, 16% and 8%.⁴

The trap is the gift with reservation. If you give your home away but carry on living in it without paying a market rent, GOV.UK says it still counts towards your estate.⁴ The same applies if you hand over a buy-to-let but keep the rent. You can then end up with CGT on the gift and inheritance tax on death.

What else should you check before gifting?

Mortgage: if your child takes over the mortgage, the debt they assume counts as payment for Stamp Duty Land Tax, and you need the lender's consent. Ask your conveyancer.
Children under 18 cannot hold the legal title to land in England and Wales, so a gift to a minor is made through a trust, and rental income over £100 a year from a parent's gift is taxed as the parent's.
Losses on a gift to a connected person can only be set against gains on later disposals to the same person.
Records: keep the valuation, the transfer deed and your original purchase papers. Your child should keep the valuation as evidence of their base cost.

Work out the CGT on a gift

Enter the market value at the date of the gift as the sale price, then your original cost and costs, to see the 2026/27 bill.

Open the property CGT calculator

Frequently asked questions

Do I pay capital gains tax if I gift a house to my child?

Yes, unless it is your main home covered by Private Residence Relief. A gift to anyone other than a spouse, civil partner or charity is treated as a sale at market value, so CGT is due on the rise in value even though you receive nothing.

Do I need to report a property gift to HMRC within 60 days?

Yes, if there is CGT to pay on a UK residential property. The gift is a disposal, so the 60-day return and payment apply from the date the transfer completes.

Can I use Gift Hold-Over Relief on a buy-to-let?

Not usually. Gift Hold-Over Relief is for business assets and unlisted trading company shares. A let residential property is an investment, so the gain is taxed when you give it. Gifts into certain trusts can be held over, but that brings inheritance tax rules of its own.

What base cost does my child take over?

The market value on the date of the gift. If they sell later, their gain is measured from that value, not from what you paid.

Can I sell the house to my child for £1?

You can, but for CGT the sale is still treated as made at market value because you are connected. For inheritance tax, the gap between the price and the value is a gift.

Is there inheritance tax on a property gift to my children?

No inheritance tax is due if you live for 7 years after the gift and do not keep benefiting from it. If you keep living there rent-free, it stays in your estate as a gift with reservation.

This page is general information, not tax or legal advice. Gifting property affects CGT, inheritance tax, Stamp Duty and your family's legal position; take advice from a solicitor or tax adviser before transferring a property.

Sources & references

The rates, allowances and rules in this guide are drawn from the official HMRC and GOV.UK sources below, checked for the 2026/27 tax year. Each link opens the relevant government page in a new tab.

Verified against published HMRC and GOV.UK guidance.