Many homeowners wonder whether it’s better to gift their home to their children now or simply leave it in their Will. The answer depends on your goals — and it’s not as simple as it sounds.
⚠️ Why Gifting Can Be Risky
For most people, giving away your house during your lifetime can cause serious problems later.
If you transfer ownership but still live in the property, the council or DWP might decide you did it to qualify for benefits or free care. This is called Deprivation of Assets — and they can still treat you as if you own the house, meaning you could lose Pension Credit or other means-tested support.
You’ll also lose control once the house is in someone else’s name. Your children could sell it, or it could be at risk if they divorce or face bankruptcy.
đź’° When Gifting Can Work
For wealthier families mainly focused on Inheritance Tax (IHT) planning, gifting can be useful.
A lifetime gift is known as a Potentially Exempt Transfer (PET) — meaning it’s free from IHT if you live seven years after making the gift.
But there’s a catch: if you continue to live in the property without paying full market rent, HMRC will treat it as a Gift with Reservation of Benefit (GROB) and count it back into your estate.
And if it’s a second home or rental property, you may owe Capital Gains Tax (CGT) straight away.
🧠Bottom Line
If you rely on benefits or worry about care costs, keep your home and pass it on in your Will instead.
If you have a large estate and want to reduce IHT, a gift might work — but only with professional tax and legal advice.
đź’ˇ Need Guidance?
The rules are complex and mistakes can be costly. Speak with one of our qualified experts before transferring property or updating your Will.
