What tax is due if I give a rental property to my children?
Gifting a rental property to a family member counts as selling it at market value for Capital Gains Tax, so tax can be due even though no money changes hands. For Inheritance Tax the gift drops out of your estate if you survive 7 years and stop benefiting from the rent.
Read more in our guide: Retiring from property
Gifting a rental property: the main rules
| Tax | Effect |
|---|---|
| Capital Gains Tax | Gain on market value; 18% or 24%; report and pay within 60 days |
| Inheritance Tax | Potentially exempt; outside the estate after 7 years |
| Taper relief | Reduces IHT on the gift if death is 3 to 7 years later |
| Gift with reservation | Keeping the rent keeps the property in your estate |
| Stamp Duty | None on a pure gift; due on any mortgage the recipient takes over |
| Spouse or civil partner | No CGT and no IHT between spouses living together |
Capital Gains Tax on a gift
Family members are connected people, so HMRC treats a gift as a disposal at full market value. A house bought for £100,000 and gifted when worth £250,000 produces a £150,000 gain, taxed at up to 24%, payable within 60 days with no sale proceeds to pay it from. Gift holdover relief is generally not available for let residential property unless the gift is into a trust. See 60-day reporting.
Inheritance Tax and the 7-year rule
A gift to an individual is a potentially exempt transfer. If you survive 7 years it falls outside your estate. If you die within 7 years it uses up your nil-rate band first, and any tax on the gift itself is reduced by taper relief after 3 years. Gifts to trusts follow different rules; see trusts.
The gift with reservation trap
If you give the property away but keep taking the rent, or keep living in it rent free, the gift is ignored for Inheritance Tax and the property stays in your estate. To make the gift effective, the income must genuinely pass to the new owner.
Selling and gifting cash instead
Some landlords sell the property, pay the tax, and gift cash. The CGT is broadly the same, but the recipient avoids taking on tenants, compliance and a mortgage, and cash can be divided between family members easily. It also means the property is valued by a real sale rather than an HMRC enquiry.
Official Sources and Further Reading
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
Gifting a rental property to a family member counts as selling it at market value for Capital Gains Tax, so tax can be due even though no money changes hands. For Inheritance Tax the gift drops out of your estate if you survive 7 years and stop benefiting from the rent.
Only with the lender's consent. If the recipient takes on the mortgage, that debt counts as payment for Stamp Duty and CGT purposes.
Yes, but for CGT you are still taxed as if you received full market value, and the discount is a gift for Inheritance Tax.
Yes. A professional valuation at the date of the gift supports the figure you report to HMRC.
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