'Can I sell my house to my daughter for a reduced fee to avoid inheritance tax?'

Every week, we help readers with their consumer issue or personal finance dilemma in our Money Problem series. You can send yours to moneyblog@sky.uk. Today, we answer this question...

"Can you gift your house to your daughter while you and your wife are still alive to avoid inheritance tax? Or could you sell it to her for £1 and reduce the tax bill?"
Dhanraj

The Money blog team answers...

In theory, you could gift your property to your daughter and avoid inheritance tax, but it's way more complicated than that.

You'd have to survive seven years for the gift to fall outside your estate for inheritance tax purposes.

Then there's the question of where you'd live. Unless you pay a full market rent, HMRC may regard it as a "gift with reservation of benefit" - again, this opens you up to inheritance tax.

Selling the house to your daughter for a nominal fee is unlikely to be the answer.

More Money Problems:
'I won a cruise bingo game, but they slashed the prize pot'
'Will I get any of my late husband's state pension?'
'HSBC error put me £6,000 in debt'

HMRC tends to treat transfers for less than market value as gifts, so the property's true value is what matters, not the price shown on the paperwork.

There can also be Stamp Duty Land Tax implications for your daughter if she takes on a mortgage or other debt linked to the property. There may even be capital gains tax and other legal consequences to consider.

One other consideration is that if a property transfer is made primarily to avoid future care costs, local authorities may investigate it as a potential deprivation of assets.

Before thinking about any of this stuff, you should ascertain whether your house is worth so much that it would attract a significant inheritance tax bill.

Married couples and civil partners can potentially pass on up to £1m before inheritance tax becomes an issue, depending on their circumstances.

Of course, if you are making any big decisions about inheritance, you should seek independent advice - the above is just a summary of things to think about!

(c) Sky News 2026: 'Can I sell my house to my daughter for a reduced fee to avoid inheritance tax?'