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Transferring ownership of property from parent to child

By April 25, 2022Property Law

Watching your children grow up isn’t easy and it’s even harder letting go of them. As a parent, you will do anything to ensure your children’s happiness and success. This may even include transferring ownership of property onto your child.

Whether you want to give your child a step up onto the property ladder or help them avoid paying Inheritance Tax, transferring ownership may be a good option for you. While this is not the most sentimental process for passing over your property to the next generation, it will ensure unwanted mistakes are avoided.

Here we will break down the process of transferring ownership to children and address any concerns that may occur during the process.

Do I need a solicitor to transfer ownership of a property?

The process of transferring equity to your child is exactly the same as with a spouse. In order to add your children to the title deeds and transfer them a share of equity, you will need the help of a solicitor.

A conveyancing solicitor can help you with this process. They will be able to advise you on the best options for you and your family. They will also handle the legal work and documentation.

transferring property ownership

If you have a mortgage on your property, you will need to consult your mortgage lender. This is to ensure that the mortgage will still be paid once your child is added to the deed. The conveyancer is also responsible for logging the changed details of ownership to the land registry. They will also calculate any stamp duty liable to HMRC.

To learn more about the transfer of equity, read our article that breaks down the step by step process.

What is shared ownership?

When transferring equity to your child, you need to decide what type of shared ownership works best for you. Shared ownership allows buyers to purchase a share of a property. It is an excellent option for helping your child get onto the property ladder. Through shared ownership, you can either become joint tenants or tenants in common.

Tenants in common allow owners to have different shares of the property. It is the most common choice for parent-child ownership. When one owner passes on, the property doesn’t automatically go to the other owner. Instead, shares are typically passed on in a will.

For joint tenants, 50% of the property is transferred to the other tenant. This is a more common choice for spouses. Full ownership automatically passes on to the surviving party. Though, it must be noted that you can switch between these two options. You don’t have to settle on one if your circumstances change.

What if my child is under 18?

Though minors are not legally able to hold property in their own name, they have property held in trust until they turn 18.

Trust properties are managed by trustees, an individual or financial institution that manages the property. Trustees must act in accordance with the best interests of the beneficiary and the wishes of the trustor (the entity that opened the trust). Solicitors will take care of setting up the trust deed and manage any legal formalities.

model house with bags of money inside

Gifting property

Gifting property is a more tax-efficient way of transferring property to your children. When you gift your property to your child, they may not have to pay Inheritance Tax when you pass away. Inheritance Tax only applies to those whose estate is valued at £325,000 or more and starts at 40% above that figure.

Though, it is worth noting that your children only avoid paying Inheritance Tax completely on a gift if you live for another seven years after gifting the property. If this is not the case, Inheritance Tax will need to be paid by the end of the sixth month after your death. If you die within three to seven years, however, your children will benefit from tax relief. Tax relief, also known as tapered relief, means that the recipients of the gift do not have to pay the full 40%.

Can I gift my house to my child and still live in it?

The short answer is yes. Nonetheless, there are a few things to be aware of. If you transfer ownership but remain living in the property, this is treated as a ‘gift with reservation of benefit.’ In such a case, you reserve the right to live in or out of the property.

Tax rules, however, dictate that even if you live beyond the seven years, the property will remain as part of your estate on your death. This also means that your property will not be exempt from Inheritance Tax.

a row of 5 semi-detached properties

In order for your property to be exempt from Inheritance Tax, you will need to pay rent to your child. But the rent you pay must be in line with the market rate, the average rate in the area. Also, bear in mind that your child is liable for paying income tax on the rent you pay them.

Is it better to gift or inherit property?

In the transfer of ownership from parent to child, it’s often better to inherit rather than gift property. This is because of the capital gains implications. Capital Gains Tax (CGT) refers to tax paid on the ‘profit’ individuals make on a property. The profit is the difference between the cost basis (purchase price) and the value of the property when gifted.

If you gift your property, your child’s cost basis will be the same as yours- regardless of what the property is currently worth. Let’s say you purchased your home for £150,000. The property is now worth £250,000. Your child’s cost basis will still be £150,000. If your child inherits your tax basis, they will have a capital gain of £100,000. This is the difference between the purchase price and current value.

This adjustment is referred to as a ‘stepped-up basis.’ If your child decides to sell the property after they inherit it, this will help reduce their capital gains tax liability.

Risks of transferring ownership of property

Aside from the capital gains implications, there are other risks to consider before signing over your home.

Once the transfer is complete, you will no longer be the legal owner. This means that you have no rights to the property. This could leave you in a vulnerable position. For instance, in the event of a fallout, your child has the right to evict you. Moreover, if your child decides to sell the property or live there themself, they can force you out despite your wishes.

transferring property ownership

On the other hand, if your child is going through a divorce from their spouse, the property could become part of a divorce settlement. This means that the property could be sold regardless of your family’s wishes.


If you’re thinking of transferring ownership of property to your child, we can support you every step of the way with our transfer of equity services.

Contact one of our qualified solicitors today to ensure that your assets are managed in the best interests of your family.