Can I sell my home to a family member?

Key takeaways

• When selling your home to a family member the process is similar to a regular sale, requiring a solicitor or conveyancer for legal procedures

• If you sell your home for a cost below fair market value there are several legal and tax implications to consider

• You can gift a property but you should seek legal advice first and be aware that living in the property without paying market rent may incur inheritance tax

• The inheritance tax threshold for passing a home to children or grandchildren is £500,000

Whether you have a main home or second home you want to give to your children or if you want to sell your home to someone you know for below market value, our guide to selling your home to a family member explains everything.

Can I sell my house to a family member?

Yes, it is entirely legal to sell your house to a family member for a purchase price as little as £1.

The transaction will transfer legal ownership to the buyer. They could then potentially sell the property for a profit in the future or use it as a buy to let property.

Selling your home for £1 can also be a strategic move to avoid inheritance tax, provided you survive for seven years after the sale, as it's considered a gift under certain conditions.

How can I sell my home for £1?

The process for selling your home for £1 is much like selling to a regular buyer. You will need a solicitor or conveyancer to carry out the conveyancing process and conduct searches on the property, before exchange and completion.

This means you will need to pay for a conveyancing solicitor to handle the sale, along with any other legal fees.

Although the sale price is nominal, the legal process remains largely the same, ensuring that all the necessary legal requirements are handled correctly and that the transaction is properly recorded.

You properly won’t need to use estate agents to sell your home, since you're not advertising it and won’t need viewings.

How much tax will I need to pay?

When you sell your home for £1, or any other cost below fair market value, there are several legal and tax implications to consider:

• If the family member decides to rent the home back to you, you could be liable for income tax on the rental income

• Should there be an outstanding mortgage on the property, early redemption fees and stamp duty land tax may apply; however, stamp duty is exempt if the property is mortgage-free

• Complex financial arrangements may require the expertise of an accountant

• Local authorities might still require the seller to sell the property to fund care home fees, potentially charging the new owner

• If the original owner dies within seven years of the sale, you may still need to pay inheritance tax

• You may need to pay capital gains tax, which may be applicable for sales of non-primary residences sold below market value

Is it better to gift a house to a family member?

Gifting property is another route, achievable through a deed of gift or transfer of gift. Before proceeding:

• Ensure all debts on the property are cleared

• Seek legal advice to fully understand the implications

• Consult estate planning advisers for a smooth transaction

• Be aware that if you continue living in the property without paying market rent, it could be considered a 'gift with a reservation of benefit' and may incur inheritance tax

How much does it cost to sell a home for £1?

Even if you’re selling a house for a small amount, certain fees are unavoidable:

• Conveyancing solicitors are essential, with costs around £1,000

• Tax planning and legal advice are critical for understanding potential liabilities, with fees varying

• You'll need to pay stamp duty if there's an existing mortgage above the £250,000 threshold, and early redemption fees may be applicable for paying off a mortgage early

Mortgage implications and considerations

When you sell or gift property for below fair value, it's important to note:

• Mortgage lenders require any outstanding mortgage to be paid off before gifting a property

• It is best to proceed when the property is owned outright with no debts secured against it

Use our mortgage re-payment calculator to see what your repayments will be based on how much you’re borrowing, the interest rate and fees of the deal, and how long you will have to pay it off for. You can also use our mortgage affordability calculator to find out how much you could borrow for a mortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.