Gifting a property – Does capital gains tax apply?

Gifting a property can be a way of reducing your Inheritance Tax liability however, it is important to be aware that other taxes, such as capital gains tax, may be levied.

When a property is given away, it is deemed as a disposal for capital gains tax purposes. This will apply when a property is sold that has not been the main residence for the entire time it has been owned.

If a property has always been rented out (buy-to-let) tax will be due on the entire time period it has been owned. However, if the property has been used as a mixture of buy-to-let and as the main residence, the tax owed will be split accordingly.

gifting property capital gains

Capital gains tax will be due where there has been an increase in the value of the property since it was purchased, minus any expenses such as stamp duty.

If a property is gifted or sold at less than market value, taxes will still be levied as if the property was being sold at market value. This is providing the person receiving the gift is a connected person.

A connected person is classed as a parent, grandparent or child however, it does not include cousins.

In most cases, capital gains tax will not be due when gifting to a husband, wife, civil partner or charity however, there can be some exceptions.

Annual Allowance

For the 2021/22 tax year, the annual allowance stands at £12,300. Any gains over this amount will be taxed at either 18% for basic-rate taxpayers or 28% for higher-rate taxpayers.

For example, if the gain is £15,000 only £2,700 will be taxed at either 18% or 28%, depending on the rate of tax in which you pay (providing there are no other gains deducted from the annual allowance).

Want to know more?

For more information on capital gains tax when gifting a property, get in touch with us.

Call us on 01704 891676

Email us at 

Send us a message via our contact page


Share on facebook
Share on twitter
Share on linkedin
Emily Dodds

Emily Dodds

Marketing and Business Development Officer

More Posts