Do I need to pay tax or stamp duty on gifting a property to a family member?

tax or stamp duty on gifting a property
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Do I Need to Pay Tax or Stamp Duty on Gifting a Property to a Family Member?

  • Generally, you do not need to pay capital gain tax or stamp duty for gifting a property.
  • If you are given the property in a will, then there is no stamp duty to consider.
  • If the property is mortgaged, then you would need to pay stamp duty on the transfer.
  • You would also need to consider inheritance tax implications for a minimum of 7 years.
  • We would recommend speaking to an accountant or a tax advisor for further information.
  • There is no tax to pay for the transfer between spouses or civil partners.
 

If you are thinking of gifting a property to one of your family members, you would probably need to consider potential tax or stamp duty implications before transferring the property to your family members.

Generally, you pay a stamp duty land tax when you exchange an asset that has a monetary value. For example, you purchased a house for £700,000 and paid stamp duty according to the government’s guidelines. However, if you gift the property to a relative, then you probably do not have to pay any stamp duty.

If you’re left land or property in a will:

If you get land or property under the terms of a will, there’s no need to tell HMRC, and you will not pay Stamp Duty Land Tax. This applies even if you took on an outstanding mortgage on the property on the date the person died. This is on the condition that no other chargeable consideration is given.

If you’re given property as a gift:

If you get property as a gift, you won’t pay Stamp Duty Land Tax as long as there’s no outstanding mortgage on it. You’ll pay Stamp Duty Land Tax if you take over some or all of an existing mortgage and the value of the mortgage is over the Stamp Duty Land Tax threshold. For example, Jack and Jenny are living together. Jenny owns a house that is worth £150,000. Jenny decided to transfer 50% of the share to her partner, Jack. Jack does not own any houses or has never owned a house before. So, his 50% share of the gifted house is less than the Stamp Duty Land Tax threshold of £250,000. Now if the property is worth £700,000, for instance, and Jack received 50% of it as a gift, he would have to pay stamp duty on it. Your conveyancing solicitor can assist you with stamp duty tax estimation.


want to transfer the property to a limited company; what are my options?

You would need to pay stamp duty on the transfer of the property at its market value. For example, you own a house that is valued at £500,000 on August 9, 2023. You have transferred ownership of the property to a limited company for £180,000 in August 2023. You will need to pay stamp duty at the market value of £500,000.

  • The property is valued at £500,000.
  • paid a chargeable consideration of £180,000.
  • You would still need to pay stamp duty based on the market value of £500,000. Your stamp duty will be calculated as follows:

Tax Band

%

Taxable Sum

Tax

first £250,000 at 3%

3

£250,000*3%

£7,500

£250k to £500k

8

£250,000*8%

£20,000

*Finance Act 2023 rule applied.

Do I need to pay stamp duty because of divorce, separation, or the end of a civil partnership?

The general answer is no if you are:

  • divorcing
  • Dissolving a civil partnership
  • annul their marriage.
  • legally separate

For example, you have been instructed by the court to split the properties because of the divorce procedure. You do not need to pay any stamp duty for the transfer of ownership.

However, you would need to pay stamp duty if your marriage or civil partnership is not registered.


For example, Jack and Jenny have been living together with his girlfriend at a property that is jointly owned by them. They will need to pay a stamp duty if they decide to transfer the title deeds as part of the separation procedures.


It is easy to decide to transfer an asset as a gift to a family member; however, it may cost you a fortune if you do not have a proper tax plan. We would recommend speaking to a financial or tax advisor if you are planning to transfer a property to a family member. This will help you understand the tax implications and any potential tax liabilities that may arise from the transfer. Additionally, a financial or tax advisor can help you create a plan that minimizes your tax burden and ensures that the transfer is done in a legally compliant manner.

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