Can I Sell a House that Was Gifted to Me?

Selling a property can be complex at the best of times. If you’re fortunate enough to have been gifted a property but don’t want to keep it, you may be wondering, “can I sell a house that was gifted to me?” 

Luckily for you, the answer is yes. In this blog, we’ll explore selling property that you’ve received as a gift, examine the tax implications and find out the quickest way to sell. 

What is gifted property?

When property is gifted to someone, it is given through a Deed of Gift (sometimes referred to as Transfer by Way of Gift). Once this process has been completed, the property is legally in your name and you have full control over it, meaning you can live in it, rent it or sell it.

How can I sell a house that was gifted to me?

In much the same way as you would sell a house normally. The only difference with selling gifted property is the tax implications, which depend on your individual circumstances. 

These may include capital gains tax (CGT) and inheritance tax, with stamp duty land tax and income tax also applied in some cases — more on this later.

What’s the process for selling a house that was gifted to me?

Again it’s much like a standard sale, but with selling a house that’s been gifted to you there are some things to keep in mind, so let’s break it down:

1. Valuation

Step one? Get your gifted property valued by three estate agents/surveyors. This gives you a reasonable idea of what you can expect to get for it. Even if you think the value hasn’t changed since the gifter bought it, we strongly suggest a new valuation, given how much the property market can fluctuate.

2. Choose a selling method

Next, you’ll need to make a decision about how to sell. Your options include a traditional estate agent, selling at auction, a cash house buyer, or selling privately. What’s right for you depends on what’s most important to you: speed, convenience, getting top dollar, retaining control of the process, or avoiding fees.

3. Prepare for viewings

Good news if you chose to sell to a cash buyer as you can avoid this step! But in all other cases, it’s time to make your property presentable for potential buyers. Get busy cleaning, decluttering, staging and making repairs where needed. A presentable home draws in more buyers and is likely to increase their offer price.

4. Accept and complete

Once you’ve wowed prospective buyers with your property and the offers come in, you can consider and accept the most appealing one — usually the highest but not always. 

5. Complete

Again, if you’ve opted to sell to a cash buyer this stage is a lot simpler, and shorter. This is where you’ll need to work with a licenced conveyancer or solicitor to handle the legal legwork. If the property was gifted recently your solicitor may need to verify that no legal restrictions are in place, as these could affect the sale.

Do I need to pay Capital Gains Tax?

When an asset (in this case a property) is sold at a profit, Capital Gains Tax is charged on the increase in value since you acquired it. Even when a property is gifted, the person gifting it is treated as having sold the property at its market value at the time of transfer. Here are the main points you need to know when it comes to CGT:

• CGT rates are 18% for basic taxpayers and 28% for higher-rate taxpayers and non-UK residents.
• No CGT is charged when property is transferred between spouses/civil partner.
• The donor (person gifting the property) may be liable for CGT.
• The recipient may also be liable for CGT when selling the gifted property (unless it’s their main residence).

Do I need to pay inheritance tax?

Inheritance Tax (IHT) is a complex matter, so it’s always best to seek professional advice when selling a gifted property, but here are some things you may want to consider:

• If the total value of the donor’s estate (including the gifted property) exceeds £325,000 IHT may be due.
• IHT is not payable on gifts given to a spouse/civil partner.
• The amount of IHT due on a gifted property depends on the time elapsed between the gift date and the donor’s passing. The more time passed, the lower the tax rate (and if it is more than seven years the property is exempt from IHT).
• If selling a gifted property pushes your estate above £325,000, it could have IHT implications for your beneficiaries down the line.

Do I need to pay income tax?

Only if you rent out the property before selling. In this scenario any rental income you received would be subject to income tax, the same as any other income from jobs, pensions or investments.

But just like other income streams, you can deduct certain expenses that relate to renting out the property, such as the cost of maintaining the property.

Other things to remember

Whilst being gifted a house is a wonderful present, selling it can come with complications. Here are some things to bear in mind:

• If there is an existing mortgage on the property, this will need to be dealt with.
• Ensure there are no outstanding charges or debts against the property.
• If your property has been gifted by a family member, ensure selling it won’t lead to disagreements.
• Consider the property’s monetary value versus its sentimental value — once it’s sold you can’t get it back.
• You may need to spend some money on renovations or repairs to get more/higher offers. 

Looking to sell?

SellHouseFast.co.uk are chain-free cash house buyers who can purchase your property up-front and quickly, without hassle or stress.
We offer a quick and guaranteed cash purchase for your property. We buy any house, with a guaranteed completion date to suit you. Get your free cash offer today to find out what your home is worth.