Should I give my house to the kids to avoid tax?

Most people know that gifts to children, such as a cash lump sum, are tax-free if you survive for at least 7 years after the gift is made. This can also be true of gifts in the form of property.

However, a little-known rule on a ‘gift with reservation of benefit’ (GWROB) could mean that your children would still have to pay tax on a property gift even if you survive for the seven-year period.

If you gift your house to a child but continue to live there without paying a market rate for rent, the GWROB tax will be payable. This rule also applies to holiday homes—if you want to continue using it yourself, you would have to pay the market rate for the periods of use.

So, if you are considering gifting property to your children, talk to your financial advisor and get all the facts – there may be better ways of ensuring your children get the maximum value out of your estate.