Adam Matthews in the Sunday Express: the inheritance tax myth of gifting your home

Adam Matthews

Our warning about parents gifting their homes to their children was featured in the Sunday Express on 25 October 2026. Here is the full press release, with comments from Adam Matthews, estate planning specialist in our Private Client team.

Parents are still gifting their homes to children in a bid to cut inheritance tax bills, despite the risk that it could end up costing them more, a law firm has warned.

Osbornes Law says it receives regular enquiries from people who mistakenly believe it will save them money and, in some cases, have already transferred ownership.

The reality, however, is fraught with risks, says Adam Matthews, an estate planning specialist at Osbornes Law, from falling foul of the taxman to potentially losing your home altogether.

Furthermore, once you have transferred ownership it is difficult if not impossible to reverse the decision should you later change your mind.

Adam says: “It’s the gift with reservation of benefit rule that most commonly trips people up. If a parent gifts their home, or part of their home, to a child, the gift only becomes exempt from inheritance tax after seven years and provided important conditions have been satisfied.

“It is these conditions that people often aren’t aware of. For example, you, as the donor of the gift, must completely wash your hands of that asset, or if you wished to continue living in your home you would have to pay a market rent to your child as the new owner. This may not be affordable, particularly if the property is in an affluent area. The new owner would, in turn, be required to declare the rental income and likely have to pay income tax on it. They would also need to maintain detailed records to demonstrate that a market rent is being paid.

“There are other, practical implications to consider. The most serious being that if you completely relinquish control of your residence, it could potentially leave you in a very vulnerable position.

“If you’re gifting the property to a child who is married, and that marriage fails, unless you have taken specific steps to safeguard your child’s interests, it may be treated as an asset in their divorce proceedings, to be carved up like any other, which could leave them with no option but to sell.

“Similarly, in the unfortunate event that your child gets into financial difficulties and is declared bankrupt, the property may have to be sold to pay off creditors.

“Another factor to consider is the deliberate deprivation of assets. If you go into care, the decision to make such a sizeable gift could be challenged and overturned if the local authority suspects that you did so to avoid paying social care or care home fees.”

Whilst gifting property may seem like the ideal solution for parents keen to protect their assets, Adam advises proceeding with caution.

“It depends on the individual case, but you really need to weigh up the pros and cons,” he says. “Can you afford to pay a market rent, for example? And will it be worth it if you consider that by gifting property, you will lose your right to valuable inheritance tax reliefs?

“For many, gifting property may not be the best plan and it demonstrates the importance of doing your research and seeking professional advice before making a decision that you may live to regret.”

You can read more in our guide to gifting property to children, or speak to our estate planning solicitors about your own circumstances.