Yes — but it won’t avoid tax. In the eyes of HMRC, selling your property to your Child at a discount is treated partly as a Sale and partly as a Gift.
Here’s what that means for Capital Gains Tax (CGT), Inheritance Tax (IHT), and your Child’s future costs.
HMRC Will Use the Market Value — Not the Sale Price
Let’s say your house is worth £300,000.
You sell it to your Child for £1, or £100,000, or any amount below market value.
HMRC will ignore the actual sale price and calculate Capital Gains Tax based on the full market value.
That means:
- If you originally bought it for £150,000
- And it’s now worth £300,000
- You’ll be taxed on the £150,000 gain, not what your Child paid
This applies even if the paperwork says it was sold.
We’ve broken down the basics of CGT in this Capital Gains Tax property guide if you’re unsure how it works.
🎥 Prefer to watch?
I’ve covered the full CGT and IHT impact in this video — including what happens if you sell to your child for £1 or well below market value.
Video coming soon: Watch how HMRC treats property sold to your child below market value.
The Discounted Portion Is Treated as a Gift
The difference between the market value and what your Child pays is classed as a Gift.
That part becomes a Potentially Exempt Transfer (PET) for Inheritance Tax.
If you die within 7 years, the gifted portion may be taxed.
And if you’re still living in the property? It could also be caught by the Gift With Reservation rules — meaning it stays in your estate.
Read our Gifting Property to a Family Member blog for a free checklist on CGT and IHT rules.
Your Child’s Base Cost Won’t Be the Discounted Price
Even though your child paid less, their base cost for CGT is still the market value at the time of the transfer.
So if they later sell the property:
- They’ll be taxed on the gain from that full market value, not what they paid you
They don’t get to “lock in” the discount.
Should You Sell at Full Price and Gift Cash Separately?
If your goal is to help your Child but avoid tax traps, one alternative is:
- Sell the property at full market value
- Then gift some or all of the proceeds (e.g. deposit help)
That keeps the tax trail cleaner — and avoids confusion around mixed gifts and sales.
But check your own CGT position before doing this — it still triggers a disposal.
Final Thoughts
You can legally sell a property to your child for less than it’s worth — but for tax, it’s treated like a gift and a sale.
You may still owe Capital Gains Tax, and they may still face Inheritance Tax later.
📞 Need help calculating the numbers or avoiding the traps? Book a property tax review and we’ll walk you through your options.
In some cases, a trust might offer more control — but also brings more complexity. Explore our full guide here