Do I need to pay Capital Gains Tax if I gift property?
If you gift someone a property, you will usually have to pay Capital Gains Tax (CGT) if it increased in value since you bought it.
It’s as if you sold the property for a profit, then took that money and gave it to them as a gift instead.
You don’t need to pay CGT if:
- You’ve lived there the entire time (it was your home)
- Or you give it to your spouse
- Or you put it into a trust for the benefit of your child. In this situation, it will be deferred until your child sells the property.
How much CGT will I have to pay?
For the 2019/2020 tax year the Capital Gains Tax rates for property are:
- 18% for your entire Capital Gains profit from property if your overall annual income is below £50,000
- 28% for your entire Capital Gains profit from property if your overall annual income is above the £50,000 threshold
You also have a £12,000 Capital Gains tax allowance. This means that:
- Your Capital Gains up to £12,000 are tax free
- If you made less than £12,000 in profit you don’t need to pay any tax.
Check our our Capital Gains Tax calculator to work out how much you need to pay.
Can I sell my property “at a friendly low price” so I don’t pay CGT?
If you’re giving it to a “connected person” (children, parents, siblings, etc.), HMRC will still ask you for CGT as if the property was being paid for at market value.
Oh, and you might also get a fine.
Are there any other taxes?
Yes: stamp duty, inheritance tax, and sometimes rental income tax.
Read more in our guide to gifting property.
How do I pay CGT for gifted property?
It’s very simple.
You can either submit a Self Assessment tax return yourself with HMRC, or sign up to TaxScouts. We can get it done easily, 100% online, and for only £119 – flat fee.
Don’t forget that you have to file the tax return and pay the Capital Gains Tax by 31st of January of the tax year in which you gifted the property.
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