Thinking of transferring a property to your spouse or children?
It can be a smart planning move, but gifting property isn’t always as simple as it sounds.
Here’s what you need to know about Capital Gains Tax, Stamp Duty, Income Tax, and Inheritance Tax before you act.
Why Transfer a Property?
Common reasons include:
- Sharing rental income with a lower-earning spouse
- Passing assets to your children
- Planning for inheritance tax
But transfers can trigger unexpected tax bills if you’re not careful.
🎥 Prefer to watch?
This video breaks down the key tax rules when transferring a property to a Spouse or Child, including CGT, SDLT, and rental income changes.
Capital Gains Tax (CGT)
HMRC treats a gift as if you sold the property at market value, even if no money changes hands.
Example:
- Bought for: £100,000
- Current value: £250,000
- Gain: £150,000
→ You may need to pay CGT now.
✅ Exception:
Transfers between spouses or civil partners are tax-neutral (no gain, no loss).
🚫 Gifts to children trigger CGT immediately — no exemption, even if they’re under 18.
Want to know how CGT is reported when you actually sell a rental property?
Read our full CGT guide for landlords to learn what HMRC expects.
Stamp Duty Land Tax (SDLT)
SDLT applies if there’s a mortgage involved, even when the transfer is a gift.
Example:
- Property has a mortgage of £150,000
- You transfer 50% to your spouse
- Their share of debt: £75,000
→ SDLT is calculated on £75,000
✅ No mortgage? No SDLT is usually due.
Income Tax After Transfer
Once transferred:
- The new owner must declare and pay tax on their share of rental income.
- For spouses, the default is 50/50 split, unless you file Form 17 and provide evidence of unequal ownership (Deed of Declaration).
Inheritance Tax (IHT)
Gifting to children may reduce your estate’s IHT exposure if you survive 7 years after the gift.
BUT: CGT still applies at the time of transfer, so you need to plan both taxes together.
Common Pitfalls to Avoid
⚠️ Assuming gifts are tax-free
⚠️ Forgetting SDLT on mortgage transfers
⚠️ Not updating Land Registry records
⚠️ Failing to declare rental income properly
What to Do Before Transferring
- ✅ Get a professional valuation
- ✅ Review mortgage terms with your lender
- ✅ Estimate your CGT and SDLT
- ✅ Update legal ownership (Land Registry)
- ✅ File Form 17 and Deed of Declaration (if applicable)
Need Help?
Transferring a property can be effective when done right — but costly when done wrong.
At Grace Certified Accountants, we help clients model the tax impact, prepare records, and avoid nasty surprises.
Let’s make sure you transfer wisely.