Can I gift my property to my son and avoid tax?

I own my house outright with no mortgage. My wife's name is not on the deeds but my family have lived there for 12 years. I would like to gift this property to my son. Do I pay tax then? If I gift this property and move to another property I own which is currently rented, when will it start becoming my main home?

Ian Says

Assuming the property you wish to gift to your son is the property that you and your family live in, then the gift will be deemed to occur at market value for capital gains tax purposes.

As this property has been your principal private residence for the last twelve years, and I assume throughout the period of ownership, then the gain on this property is exempt from capital gains tax through principal private residence relief.

The transfer of value is a potentially exempt transfer for IHT purposes, so provided you survive for seven years this value will drop out of your estate.

The property that was rented and which you move in to will become your PPR from the date you move in. But you should note that on a future sale some of the gain on this property may be taxable - as the gain is time-apportioned between the time not PPR and time PPR, with the final three years being deemed PPR in any event.

You would also have the benefit of lettings relief, which is up to £40,000 per owner (i.e. consider transferring into joint names with your wife if not already).