You can give your home to your children, but doing so does not automatically remove it from your estate for inheritance tax. If you carry on living there rent free, the property is usually treated as a gift with reservation of benefit and still counts towards your estate when you die (gov.uk, gifts and Inheritance Tax, as at August 2026, subject to change).
Giving away the family home is one of the most common ideas families raise when they think about inheritance tax and care costs. It can work in some situations, but the rules are stricter than they first appear, and a gift that is handled without care can create a larger tax bill, not a smaller one. This guide sets out how the rules apply in England and Wales, the taxes to weigh up, and the alternatives many people consider instead. Figures are current as at August 2026 and are subject to change.
Can you give your home to your children?
Yes. There is nothing to stop an owner transferring a property to their children by a deed of gift, registered at HM Land Registry. The legal transfer is usually straightforward. The difficulty is that the tax and care-funding consequences depend heavily on how the gift is structured and on what happens afterwards, in particular whether the person giving the home away continues to live in it or benefit from it.
A gift of a home to another individual is normally a potentially exempt transfer for inheritance tax. That means no tax is due at the time of the gift, and it falls outside the estate entirely if the giver survives seven years (gov.uk, as at August 2026, subject to change). The problem is that this only holds where the gift is a genuine, outright transfer with no strings attached.
The main trap: gift with reservation of benefit
The single most important rule to understand is the gift with reservation of benefit. If you give your home away but keep living in it rent free, HMRC treats the property as still part of your estate for inheritance tax, however many years pass (gov.uk, gifts and Inheritance Tax, as at August 2026, subject to change). In that situation the gift achieves little for inheritance tax, because the seven-year clock does not even start until you stop benefiting from the home.
There are recognised ways around this, though each has its own drawbacks:
- Move out. If you no longer live in the property, there is no reservation of benefit and the seven-year rule applies normally.
- Pay a full market rent. A giver who stays in the home can avoid the reservation of benefit by paying the new owners rent at the going rate, reviewed regularly (gov.uk, as at August 2026, subject to change). The rent is taxable income for the recipient, which can reduce or remove the saving.
- Give a share and genuinely share the home. Where a parent gives a share of the property to a child who also lives there, and both share the running costs, the reservation rules may not bite. The arrangement has to be real and ongoing.
A related income tax charge, the pre-owned asset tax, can also apply where someone continues to enjoy an asset they have given away, so the two rules need to be considered together.
How the seven-year rule and taper relief work
Where the gift is outright and you keep no benefit, the value falls outside your estate if you live for seven years. If you die within that period, the gift is added back and may be taxed. Taper relief can reduce the tax due on the gift itself, not its value, where death occurs between three and seven years after the gift (gov.uk, gifts and Inheritance Tax, as at August 2026, subject to change).
| Years between gift and death | Rate of tax on the gift |
|---|---|
| Less than 3 years | 40% |
| 3 to 4 years | 32% |
| 4 to 5 years | 24% |
| 5 to 6 years | 16% |
| 6 to 7 years | 8% |
| 7 years or more | 0% |
Source: gov.uk, gifts and Inheritance Tax, as at August 2026, subject to change. Taper relief only applies where the total gifts in the seven years before death are above the £325,000 nil-rate band (gov.uk, as at August 2026, subject to change).
It is worth remembering that giving the home away also gives up the residence nil-rate band, worth up to £175,000 where a home passes to direct descendants on death (gov.uk, as at August 2026, subject to change). For many families, keeping the home and using that allowance produces a better result than gifting it during life.
Other taxes to weigh up
Inheritance tax is not the only tax in play. Two others often matter more than people expect.
| Tax | How it can apply to a gift of your home |
|---|---|
| Capital Gains Tax | A home that has been your only or main residence throughout ownership is usually covered by private residence relief, so no CGT arises on the gift (gov.uk, as at August 2026, subject to change). A second property, or a home you no longer live in, can produce a CGT charge on the gift, and the children may face CGT on any later rise in value. |
| Stamp Duty Land Tax | A pure gift with no money changing hands and no mortgage carries no SDLT. If the children take on an outstanding mortgage above the threshold, SDLT can be due on the debt taken over (gov.uk, as at August 2026, subject to change). |
| Inheritance Tax | Applies as set out above, with the gift with reservation rule the key point to get right. |
There are also non-tax risks. Once the home is in your children's names, it is exposed to their circumstances, including divorce, bankruptcy or a fall-out, and you lose legal control of a property you may still be living in.
Care fees and giving your home away
Some families consider gifting the home in the hope of planning for or limiting the impact of future care fees. This is where particular caution is needed. If a local authority decides that a home or other asset was given away in order to reduce a future care contribution, it can treat you as if you still owned it under the deprivation of assets rules in the Care Act 2014 statutory guidance (gov.uk, Care and support statutory guidance, as at August 2026, subject to change).
There is no fixed time limit on how far back a local authority can look, and the key question is whether avoiding care charges was a significant reason for the gift and whether a need for care could reasonably have been foreseen at the time (gov.uk, as at August 2026, subject to change). This is general information rather than a comment on any individual case. Our guide to planning for care home fees looks at this in more detail.
Alternatives many families consider
Because an outright gift of the home carries so many conditions, families often look at other options first. These are general possibilities, not recommendations, and the right combination depends on individual circumstances.
- Using the nil-rate bands. A married couple or civil partners leaving a home to children can often pass on up to £1,000,000 before inheritance tax by combining both allowances (gov.uk, as at August 2026, subject to change).
- Smaller lifetime gifts. The annual exemption of £3,000, gifts of up to £250 per person, and regular gifts out of surplus income can reduce an estate without giving up the family home (gov.uk, as at August 2026, subject to change).
- A will and trust structure. A carefully drafted will, sometimes with a trust, can direct how the home passes on death while keeping control during life.
- Advice on the wider picture. Reviewing the home as part of your wider estate plan is usually more useful than treating it in isolation. Our guide to inheritance tax sets out the thresholds in more detail.
- Nil-rate band £325,000; residence nil-rate band up to £175,000, frozen until 5 April 2031 (gov.uk, subject to change).
- Standard inheritance tax rate 40%, or 36% where at least 10% of the net estate passes to charity (gov.uk, subject to change).
- Living in a home you have given away is normally a gift with reservation of benefit, so it stays in your estate (gov.uk, subject to change).
- A gift falls fully outside your estate only if you survive seven years and keep no benefit (gov.uk, subject to change).
Frequently asked questions
Can I give my house to my children and still live in it?
You can, but for inheritance tax it usually counts as a gift with reservation of benefit, so the home stays in your estate however long you live (gov.uk, as at August 2026, subject to change). One recognised way to avoid this is to pay the new owners a full market rent, though the rent is taxable income for them.
Do you pay inheritance tax on a house given to children?
Not if the gift is outright, you keep no benefit, and you survive seven years, in which case the value falls outside your estate (gov.uk, as at August 2026, subject to change). If you die within seven years the gift is added back, though taper relief may reduce the tax on it where death occurs three to seven years later.
How long do you have to live after giving your house away?
Seven years, provided you no longer benefit from the property (gov.uk, as at August 2026, subject to change). If you keep living there rent free, the seven-year period does not start until the benefit ends.
Will I pay Capital Gains Tax if I give my home to my children?
Usually not, if it has been your only or main home throughout ownership, because private residence relief applies (gov.uk, as at August 2026, subject to change). A second property or a home you have moved out of can produce a CGT charge, and the children may face CGT on any later increase in value.
Can I give my home away to avoid care fees?
Giving a home away specifically to reduce a future care contribution can be treated as deliberate deprivation of assets, in which case a local authority may assess you as if you still owned it (gov.uk, Care and support statutory guidance, as at August 2026, subject to change). There is no fixed look-back period. This is general information, not advice on any individual situation, and care-fee planning is an area where many people take professional advice.
Is it better to gift my home or leave it in my will?
It depends on the whole estate, but leaving a home to direct descendants on death can use the residence nil-rate band of up to £175,000, which is lost if the home is given away in life (gov.uk, as at August 2026, subject to change). Many families find that keeping the home and planning through a will produces a clearer and safer result than an outright lifetime gift.