Transferring Ownership of Your Home to a Family Member

Please Note: This article is an update to a piece we originally published in January 2024. It has been rewritten to reflect recent changes in the law and tax rules.

Passing the family home to a son, a daughter, a sibling, or another relative is one of the most common instructions we receive. It sounds straightforward, and in many ways it is simpler than a sale on the open market, because there is no estate agent, no bidding, and often no mortgage to redeem. What catches people out is the tax and the paperwork.

My team here in the conveyancing department at McCarthy + Co Solicitors LLP handles voluntary transfers on a regular basis, and the advice I give at the outset is always the same. Take the tax advice before you sign anything, not afterwards. Once a deed is executed, your options narrow considerably.

What is a transfer of home ownership?

A transfer of ownership between family members is usually called a voluntary transfer or a voluntary conveyance. It means the legal owner of the property, known as the transferor, transfers their interest to another person, known as the transferee, for no payment or for less than the property is worth. The deed will often record that the transfer is made in consideration of natural love and affection rather than for money.

The transfer can take one of several forms:

• An outright gift of the whole property to one person.
• A transfer into joint names, so that parent and child hold the property together.
• A transfer of the property with a right of residence reserved for the person giving it away.
• A transfer of a site out of a larger holding, most commonly a parent giving a site to a child who intends to build.

Each of these has a different tax outcome, so the structure matters as much as the intention behind it.

What is involved in the process?

A voluntary transfer follows most of the same steps as a sale, and there are a few extra ones. Generally, you should expect the following:

• Separate solicitors for each side. Under the Solicitors (Professional Practice, Conduct and Discipline) (Conveyancing Conflict of Interest) Regulation 2012, one solicitor cannot act for both parties to a conveyance, and this applies to voluntary transfers as it does to sales.
• Investigation of title. Your solicitor will check the title documents, planning history, and any burdens registered against the property.
• A professional valuation. Because the transfer is a gift, the tax is calculated on the open market value of the property rather than on any money changing hands, so a proper valuation is essential.
• A deed of transfer. This is the document that actually moves the ownership, and it must be executed correctly.
• A Land Registry compliant map, where only part of a folio is being transferred, for example, when a site is being carved out of a larger plot.
• The consent of a non-owning spouse or civil partner. Section 3 of the Family Home Protection Act 1976 renders a conveyance of the family home void if the prior written consent of the other spouse was not obtained, and equivalent protection applies to civil partners.
• The consent of any lender. If there is a mortgage on the property, the lender must be dealt with before the transfer can proceed.
• A stamp duty return. This must be filed, and the duty paid within 44 days of the deed being executed.
• Registration with Tailte Éireann. Tailte Éireann reports that around 15% of applications involving a deed of transfer are rejected each year, usually for routine errors, so this stage rewards care.

What are the tax implications of transferring home ownership to a family member?

Three separate taxes can arise on the same transaction, and they are paid by different people. I often advise clients to think of it as three questions rather than one.

Stamp duty

Stamp duty is payable by the person receiving the property. Where the property is a gift, the duty is calculated on the market value, not on the amount paid.

The current rates for residential property, which have applied since 2 October 2024, are:

• 1% on value up to €1 million.
• 2% on the portion between €1 million and €1.5 million.
• 6% on any portion above €1.5 million.

Non-residential property is charged at 7.5%. The treatment of a site can be more complicated than it first appears, because a site transferred in connection with an arrangement to build a house on it may be treated as residential property, so it is worth checking the position in each case.

There are two points worth noting. Transfers between spouses and civil partners are exempt from stamp duty altogether. Consanguinity relief, which reduces the rate to 1%, applies to transfers of farmland between certain relatives and not to the transfer of a house, so it is a relief that is frequently misunderstood. You can read the detail on Revenue’s page covering reliefs for farmers.

If the return is filed late, Revenue applies a surcharge of 5% where it is filed within 92 days and 10% thereafter, together with daily interest on the unpaid duty.

Capital Gains Tax

Capital Gains Tax is payable by the person giving the property away, which surprises a great many people. Because a parent and child are connected persons, Revenue treats the transfer as taking place at market value even though no money changes hands. The current rate is 33%, with the first €1,270 of gains in a year exempt.

Several reliefs commonly apply:

• Principal Private Residence relief. If the house has been your only or main residence throughout your period of ownership, the gain is generally relieved in full, which is why gifting the home you live in often produces no Capital Gains Tax at all.
• Transfers between spouses and civil partners are exempt.
• Transfer of a site from a parent to a child. Where the site is one acre or less and worth €500,000 or less, and the child builds a house on it and lives in it as their only or main residence, the gain can be relieved. The relief is clawed back if the child does not build, or does not occupy the house for at least three years.

Where the property is an investment property, a holiday home, or a house that was rented out for part of the period of ownership, a real Capital Gains Tax bill can arise, and it must be paid by 15 December for disposals made between 1 January and 30 November, or by 31 January for a disposal made in December.

Capital Acquisitions Tax

Capital Acquisitions Tax, often called gift tax or inheritance tax, is payable by the person receiving the property at a rate of 33% on the value above the relevant threshold. The thresholds that apply at the time of writing this are:

• Group A: €400,000. This covers gifts from a parent to a child, and certain gifts to foster children and to grandchildren in defined circumstances.
• Group B: €40,000. This covers gifts to a brother, sister, niece, nephew, grandchild, parent, or grandparent.
• Group C: €20,000. This covers everyone else.

The threshold is a lifetime figure rather than an annual one. All gifts and inheritances taken within the same group since 5 December 1991 are added together, so a child who received €200,000 from a parent some years ago has only €200,000 of the Group A threshold left.

Two further points are worth knowing:

• The small gift exemption. The first €3,000 received from any one person in a calendar year is exempt and does not use up the threshold.
• Credit for Capital Gains Tax. Where the same transfer gives rise to both Capital Gains Tax for the giver and Capital Acquisitions Tax for the receiver, a credit is available so that the same value is not taxed twice. The credit is withdrawn if the recipient disposes of the property within two years.

You must file a Capital Acquisitions Tax return on Form IT38 once the total value of what you have received in a group exceeds 80% of the threshold, even where no tax is actually payable. The pay and file date is 31 October in the year of the gift where the valuation date falls between 1 January and 31 August, and 31 October of the following year where the valuation date falls between 1 September and 31 December.

Is there an exemption for the family home?

There is, but it is far narrower than most people expect, and this is one of the biggest sources of disappointment in this area of practice.

The dwelling house exemption applies readily to inheritances. Where the house is a lifetime gift rather than an inheritance, it applies only where the person receiving it is a dependent relative of the person giving it, meaning someone who is either aged 65 or over at the date of the gift, or who is permanently and totally incapacitated by mental or physical infirmity from maintaining themselves. In addition, the recipient must have lived in the house as their only or main home for the three years before the gift, must not own or have an interest in any other house, and must continue to live in it as their only or main home for six years afterwards.

For the great majority of parent-to-child gifts, therefore, the exemption is simply not available, and the Group A threshold is what protects the transaction.

Can I give the house away and still live in it?

This is one of the most frequent questions we are asked, and it can be done, but it needs to be documented properly.

A right of residence can be reserved in the deed. Revenue values a right of residence at roughly 10% of the market value of the property, or 20% where the right includes support and maintenance, and that value is deducted from the value of the gift for tax purposes. A further charge can arise for the owner when the right eventually ceases.

If nothing is documented and the parent simply continues to live in the house rent free, Revenue may treat that as a separate annual gift under the rules on the free use of property, calculated by reference to the market rent. The small gift exemption can be set against that annual benefit, but it is far better to deal with the arrangement openly in the deed than to leave it to be discovered later.

How does a transfer affect Fair Deal?

The Nursing Homes Support Scheme, commonly called Fair Deal, applies a five-year look-back. The financial assessment takes into account assets transferred in the five years before the application is made, so gifting the house does not remove it from the calculation if care is needed within that window.

It is also worth remembering that the contribution based on the principal private residence is capped at three years. For that reason, transferring the home purely to protect it from nursing home costs is often the wrong reason to do it, and I would always encourage families to weigh the actual benefit against the tax cost and the loss of control.

Capacity, independence, and undue influence

Where the person transferring the property is elderly or unwell, capacity and free will become central. The Assisted Decision-Making (Capacity) Act 2015, which commenced on 26 April 2023, replaced the old wards of court system and introduced a graduated range of decision support arrangements.

If the owner no longer has capacity, an enduring power of attorney may allow an attorney to act, but an enduring power created on or after 26 April 2023 must be registered with the Decision Support Service and can only be relied upon once the donor has lost capacity and the Decision Support Service has been notified.

The Law Society also expects a solicitor acting for an older or vulnerable client to meet that client alone, to satisfy themselves that the client understands the transaction and is acting freely, and to keep a clear contemporaneous note. This is not a formality. A transfer made under presumed or actual undue influence can be set aside years later, and independent legal advice is the best protection for everyone involved, including the family member receiving the property.

What are the risks of transferring ownership of your home to a family member?

A gift of the family home is a serious step, and these are the risks I ask clients to sit with before they commit:

• You lose legal control. Once the transfer is registered, the property belongs to someone else. You cannot sell, mortgage, or leave it in your will.
• It is very difficult to undo. A voluntary transfer cannot generally be reversed without the full agreement of everyone involved, and reversing it can create a further set of tax charges.
• The property is exposed to the recipient’s circumstances. If your child separates, is sued, gets into financial difficulty, or dies before you, the house forms part of their affairs rather than yours.
• Creditors and insolvency. A voluntary transfer made when the owner has debts can be challenged, and it may be set aside if it was made to put assets beyond the reach of creditors.
• Family disagreement. Transferring the home to one child during your lifetime can cause lasting resentment among the others, and it can also affect how your estate is divided later.
• An unexpected tax bill for the recipient. Stamp duty and any Capital Acquisitions Tax fall due within months of the transfer, and a family member who has just received a house may not have cash available to pay them.
• Means-tested payments. A gift can affect entitlement to certain means-tested supports for either party.

Practical steps to take before you transfer

• Obtain a written market valuation of the property.
• Ask your accountant or tax adviser to model the stamp duty, Capital Gains Tax, and Capital Acquisitions Tax before anything is signed.
• Check how much of the relevant Capital Acquisitions Tax threshold has already been used by earlier gifts.
• Decide whether a right of residence, a life interest, or a transfer into joint names would suit the family better than an outright gift.
• Speak to your lender if there is a mortgage.
• Review your will at the same time, because giving away the family home during your lifetime usually means your will needs to be redrafted.
• Instruct your own solicitor, and make sure the other party instructs theirs.

Would you like to talk to a solicitor about transferring ownership of your property?

If you have any further questions in relation to the transfer of ownership of your home to a family member, our conveyancing team would be more than happy to assist you. Arrange a time to speak with a solicitor here by completing our quick and confidential online form.