Will I have to pay tax if I gift my son money towards his house?

19 June 2019


My son and daughter-in-law bought a house five years ago. As their salaries were not sufficient to get a mortgage at the time, I was added to the mortgage. This means the house deeds are in all three names. The mortgage deal is coming to an end, and my son and daughter-in-law are remortgaging. I need to come off the mortgage and gift my share in the house to them so that they can get a long-term mortgage.

Will they have to pay stamp duty again because of the change in ownership? As I am gifting my share of the house, am I liable for any capital gains tax?



Stamp duty – or stamp duty land tax to use its full name – is a tax that you pay to HMRC when you buy a property. How much is paid depends on where the property is located (rates are different across England, Scotland, Wales and Northern Ireland); how much you are paying for it; and whether or not it is your only property.

In this case, it is a change of ownership rather than an outright purchase, so stamp duty would not apply. You would be liable for capital gains tax on any increase in the value of your share from the date of the original purchase. You could offset against this your share of any costs that you may incur in arranging the transaction, such as legal fees; and you have a personal capital gains tax allowance of £12,000 for the 2019/20 tax year.

There is another potential tax to be aware of, and that is inheritance tax (IHT).

The gift of your share of the property would be classed as a potentially exempt transfer (PET) for IHT purposes. If you died within seven years of making the gift, it would still be counted as part of your estate and may be liable for IHT, depending on the size of your remaining estate.

The total gift could be reduced by your annual gift allowance of £3,000 if you have not already used it this tax year. If you did not use your annual allowance in the previous tax year, you may bring that forward, reducing your gift by £6,000 in total.