How to Transfer Ownership of a House: A Step-by-Step Guide

The first part of the process is deciding the type of transfer you wish to do. This will dictate the process you will have to follow.

Full Ownership Transfer vs. Partial Equity Transfer

A full ownership transfer typically occurs when the ownership of a property is fully transferred to a family member. On the other hand, a partial equity transfer is common when adding a new spouse to the title, converting from sole to joint ownership.

Gift, Sale, or Equity Change

Whether you are gifting, selling, or changing the property's equity, there may be significant tax implications. You should calculate the costs of the different taxes before deciding on a specific route. Alternatively, if you have a tax advisor it's worth speaking to them before deciding on a course of action.

It's important that no matter what type of transfer you choose, you use an experienced conveyancer to assist you in the process. Transferring a property involves significant documentation that contains legal jargon you may be unfamiliar with, a solicitor understands these and can make sure all the documents are correct.

You’ll need to get all the necessary documentation to transfer the ownership either fully or partially. These include:

• For full ownership transfers: form TR1
• Or for partial transfers: form TP1
• Register changes with the Land Registry: AP1
• Proof of Identity ID1
• If gifting the property: Deed of Gift

If you have an outstanding mortgage, your lender will need you to contact them when making any changes to the ownership of the property. They will want to conduct checks on the new owner(s) to make sure they can afford repayments.

Once you have authorisation from the mortgage lender, you can then complete the process. You'll need to complete the relevant transfer deed (TR1 or TP1), depending on the type of ownership transfer it is.

If you are gifting the property, you’ll need to complete a ‘deed of gift’ where you specify the share that's been gifted. This document will go alongside the others mentioned, whether gifted or transferring equity to someone else.

Once you have completed all of the relevant forms you will need to submit them to HM Land Registry at their standard address. According to HM Land Registry, it can take on average 2 - 25 days to complete an application for a change to an existing registered title.

If you are gifting a property to a family member, they will be liable for Inheritance Tax (IHT). There is an exemption to this, the 7-year rule, also known as the "Potentially Exempt Transfer" (PET).

When you gift your share to a family member, there will be no IHT as long as you survive for 7 years. Additionally, if you pass away between the 3rd and 7th year following the gift, the tax liability is gradually reduced each year, as outlined in the table below:

You are eligible to ‘give’ a share or the whole property to a spouse or civil partner and not pay any Capital Gains Tax (CGT). Similarly, if you are gifting to your children, as long as you are eligible for Private Residence Relief you will not have to pay any CGT.

CGT is a tax related to selling or giving away assets over a certain value (currently £3,000). Should you be required to pay any, the following is what you can expect to pay:

(Costs are estimated and based on the basic and higher tax rates with the current tax-free allowance of £3,000)

Read more on Inheriting a House From Your Parents

If you transfer property to someone else, stamp duty isn't required. If you are the one receiving the property or a share then you might have to pay Stamp Duty Land Tax (SDLT). The exact amount of tax you pay will depend on how much the property is worth. If there is a mortgage still attached to the property you can expect to pay this tax.

If you are a ‘first-time buyer’ and have been gifted the property you will be required to pay SDLT, as the tax relief for these buyers is only applicable for purchases and ‘gifting’ does not count.

The rules are similar in Wales and Scotland. However, in Wales, there is no relief for 'first-time buyers'.

Read more on Stamp Duty on Second Homes

You might get to a stage in your life where you will not benefit from selling a property, for either age or health-related reasons. You may even want to help a family member get onto the property ladder and transferring them the ownership is the only solution.

Gifting the property is helpful from a tax perspective, as you both can avoid paying either Inheritance Tax or Capital Gains Tax.

Changes in personal circumstances, like marriage or separation, may require transferring property ownership. For instance, you might transfer part of a property to a new spouse after marriage or remove an ex-partner after separation or divorce.

When transferring property to a new spouse, no tax is owed due to the "no gain no loss" (NGNL) rule, meaning no Capital Gains Tax (CGT) applies. Ownership can transfer between spouses as long as both live in the property during the same tax year. The ownership share is transferred at the original purchase value, not its current worth.

For separation or divorce, timing is key. If the transfer happens in the same tax year as the separation, the NGNL rule applies, and no CGT is due. Transfers in later tax years no longer qualify for the NGNL rule, and the transferring spouse must pay CGT based on the property’s market value.

When you die and your property passes to your children, if it goes over the current Inheritance Tax threshold of £325,000 your children will be liable to pay a 40% tax on anything over this. It's for this reason that you may be looking to get your estate organised to simplify the probate process for loved ones upon your death.

You may wish to transfer some or all ownership of the property to loved ones to avoid them paying this. It's worth reiterating that as this is considered a ‘gift’ you would need to survive the succeeding 7 years to avoid this tax.