Yes, you can legally sell your house to your son, daughter or another relative for £1, or for any price below its market value, but the tax and care funding rules look through the price: Capital Gains Tax is worked out on the market value, the discount counts as a gift for Inheritance Tax, and a council can treat the home as still yours if it decides the sale was made to avoid care costs. Stamp Duty and your mortgage work differently again.
None of this makes a family sale wrong, but it has long-term consequences for everyone involved. This page explains how the rules generally work. It is not advice, so take independent legal and tax advice before you agree anything.
Can you sell your house for £1?
No rule says a house must be sold for its market value. You can agree any price, including a nominal £1. What changes is how HMRC, and potentially your council, treat it. In substance, a sale far below value is part sale and part gift. GOV.UK gives exactly this example: if you sell your house to your child for less than its market value, the difference counts as a gift for Inheritance Tax.
How is Capital Gains Tax worked out on a sale to family?
Capital Gains Tax law treats you and certain relatives as “connected”. Under section 286 of the Taxation of Chargeable Gains Act 1992, you are connected with your spouse or civil partner, your relatives, and the spouses or civil partners of your relatives. “Relative” means brother, sister, ancestor or lineal descendant, so it includes your children and grandchildren.
A sale to a connected person is treated as not at arm’s length, and so as made at market value. GOV.UK puts it simply: market value is used instead of the actual amount for gifts and for assets sold for less than they are worth to help the buyer.
- Your own home. GOV.UK says you do not pay Capital Gains Tax when you sell, or “dispose of”, your home if it has been your only or main home for all the time you have owned it and the other Private Residence Relief conditions are met. So transferring your own main home to a child is often free of the tax, even at market value.
- A second home or buy-to-let. You may owe tax on the gain up to the market value at the date of transfer, even if your child pays £1. For 2026 to 2027, GOV.UK gives rates of 18% and 24% and a £3,000 tax-free allowance, with any tax on UK residential property reported and paid within 60 days.
- Your spouse or civil partner. Transfers between spouses and civil partners who live together are generally free of Capital Gains Tax.
Your child is treated as acquiring the home at market value, their starting point if they sell later. HMRC can challenge a valuation, and GOV.UK offers a post-transaction valuation check. Our guide to Capital Gains Tax on property explains the reliefs in more detail.
What about Inheritance Tax and the 7-year rule?
The gift element is treated like any other gift. GOV.UK says no tax is due on gifts if you live for 7 years after giving them. If you die within 7 years, the gift may be taxed, and the rate depends on when it was made.
| Years between gift and death | Inheritance Tax rate on the gift |
|---|---|
| Less than 3 | 40% |
| 3 to 4 | 32% |
| 4 to 5 | 24% |
| 5 to 6 | 16% |
| 6 to 7 | 8% |
| 7 or more | 0% |
GOV.UK adds that this sliding scale, called taper relief, only applies if the total value of gifts made in the 7 years before death is over the £325,000 tax-free threshold. Tax on gifts is usually paid by the estate, unless more than £325,000 was given away in those 7 years. Keep a record of what you gave, to whom, its value and the date.
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Can you sell or give your home to your children and keep living there?
GOV.UK says that if you give something away but still benefit from it, it is a “gift with reservation” and counts towards the value of your estate. Its first example is giving your home to a relative but still living there.
To avoid that, GOV.UK says you must pay rent to the new owner at the going rate for similar local properties and pay your share of the bills. There is an exception if you give away only part of the home and the new owners also live there. The 7-year rule does not apply to gifts with reservation.
Is Stamp Duty due on a sale to a family member?
Stamp Duty Land Tax, which applies in England and Northern Ireland, is charged on the “chargeable consideration”: anything of monetary value the buyer gives. Between individuals it is not generally based on market value. HMRC says you will not pay SDLT on a gift as long as there is no outstanding mortgage on it. But if your child pays money, or takes over some or all of an existing mortgage, that counts, and SDLT is due if it is over the threshold.
GOV.UK’s current residential rates start at 0% up to £125,000 and 2% on the next £125,000. First-time buyers pay nothing up to £300,000, and anyone who will own more than one home usually pays 5% on top. As an illustration only, if your son took over a £150,000 mortgage and no relief applied, SDLT at standard rates would be £500 (2% of the £25,000 above £125,000). Wales and Scotland have their own taxes, Land Transaction Tax and Land and Buildings Transaction Tax, with their own rules.
What if there is a mortgage on the house?
GOV.UK says that if you have a mortgage on a property you are selling, you will need to move it to your new property or pay it off, and a family sale is no different. Your mortgage is in your name and secured on the home, so it normally has to be repaid on completion unless your lender agrees another arrangement, and your child would need their own mortgage to borrow. Talk to your lender before you agree anything, and check for early repayment charges. Our guide to selling a house with a mortgage explains how redemption works.
Can selling to family help you avoid care costs?
England’s care and support statutory guidance explains that councils look for “deprivation of assets”: a person intentionally reducing their assets to reduce what they are charged for care. It lists transferring the title deeds of a property to someone else as a common example.
The guidance does not set a cut-off date. The council considers whether avoiding care charges was a significant motivation in the timing, and whether the person could reasonably have expected to need care. It would be unreasonable to find deprivation if they were fit and healthy and could not have foreseen it.
If the council decides deprivation has happened, it should assess the person as if they still owned the asset. Where it was transferred to someone else to avoid the charge, the person who received it can be liable to pay the council the difference, up to the benefit they received. Wales, Scotland and Northern Ireland have their own care charging rules. Our guide to selling a house to pay for care explains the alternatives.
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What else could go wrong?
- Bankruptcy. In England and Wales, a gift or a sale for significantly less than a home is worth is a “transaction at an undervalue”. If you are made bankrupt and it took place in the 5 years before the bankruptcy application or petition, the trustee in bankruptcy can, subject to conditions, ask the court to restore the position (Insolvency Act 1986, sections 339 and 341).
- Family circumstances change. Once the home belongs to your child, it is theirs, and it could be affected by their own finances or relationships.
Why take independent legal and tax advice?
Because the price you choose affects your tax, your child’s tax, your estate and potentially your care funding, all at once. A solicitor can handle the transfer and explain your options, and a qualified tax adviser can work through the tax for your circumstances. Your child may want their own advice, as their interests are not the same as yours. HMRC’s guidance on GOV.UK is the free starting point.
What if a family sale is not the answer?
If a relative cannot afford to buy, or a family sale does not solve the problem, you can get offers for my home from vetted cash buyers on our panel. Be aware that a quick sale to a cash buyer usually means accepting less than full market value in return for speed and certainty, so compare any offer with estate agents’ valuations. We never charge homeowners, and there is no obligation to accept.
Common questions
Can I sell my house to my son for £1?
Legally, yes. But for Capital Gains Tax a sale to a close relative is treated as happening at market value, for Inheritance Tax the difference between the value and the £1 counts as a gift, and if you keep living there without paying a market rent it can be treated as a gift with reservation. Take independent legal and tax advice first.
Do I pay tax if I sell my house to my daughter for less than it is worth?
It depends on the property. If it has been your only or main home for the whole time you owned it and the other Private Residence Relief conditions are met, there is usually no Capital Gains Tax. On a second home or buy-to-let, the gain is worked out on market value. The discount is also a gift for Inheritance Tax, which is not taxed if you live for 7 years afterwards.
Can I give my house to my children and still live in it?
You can, but GOV.UK says that unless you pay rent to the new owner at the going rate and pay your share of the bills, it counts as a gift with reservation and is added to the value of your estate when you die. There is an exception if you give away only part of the home and the new owners also live there.
Will selling my house to my son stop the council counting it for care fees?
Not if the council decides you did it to avoid care charges. England's care and support statutory guidance lists transferring the title deeds of a property to someone else as a common form of deprivation. The council can assess you as if you still owned it, and the person who received it can be asked to pay the difference.
Does my child pay Stamp Duty if I sell them my house cheaply?
Stamp Duty Land Tax is charged on what the buyer actually gives, not on market value. A gift with no mortgage attached is not normally taxed, but if your child pays money or takes over some or all of a mortgage, that counts and SDLT is due if it is over the threshold. Wales and Scotland have their own property taxes.
Related guides
- Capital gains tax on selling a house Private Residence Relief, current rates, allowances and the 60-day deadline.
- Selling a house to pay for care The 12-week disregard, deferred payments, attorneys and deputies.
- Selling a house with a mortgage Redemption, early repayment charges, porting and negative equity.
- Can you sell your house to your own limited company? CGT, Stamp Duty, incorporation relief and lender issues for landlords.