How can I gift a property to my daughter without paying capital gains tax?

David Wesley-Yates
26 August 2015


I have invested in a buy-to-let property that I intend to give to my daughter for her 18th birthday. Will this be liable for capital gains tax when I give it to her? If so, can I get around it by transferring the property to my husband just prior to gifting to my daughter?



Capital gains tax is raised when you sell or gift an asset for more than you bought it for. You have a tax-free amount of £11,100 but the excess is taxed at 18% for basic-rate taxpayers and 28% for higher-rate taxpayers.

If you gift your daughter the property, you will have to pay capital gains tax on the gift.The amount you will be taxed on will be the difference between the current value of the house and the price you paid for it.

If you give the asset to your husband, the transfer will be deemed to take place on a 'no gain, no loss' basis. This means that your husband inherits the property at the same value you did and there is no capital gains tax to pay. However, when he gives the house to your daughter, capital gains tax will be due and calculated from what you paid for it.

Taxpayers sometimes gift assets to their spouse if they are a basic-rate taxpayer or have an unused annual exemption, so the tax bill will be smaller. But there is the chance you'll be caught by the anti-avoidance legislation if you try this.

You could consider transferring the property into a trust for the benefit of your daughter.This has the benefit of allowing you to defer any capital gains until your daughter sells the property. Be aware though that a trust will incur fees.

David Wesley-Yates is a chartered tax adviser at Red & Black Accountancy