Escape CGT when buying a home for your children

If you are wondering if the day will ever come when your (adult) children finally move out, you may be able to help them by buying a property for them to live in as ‘life tenants’.

We at Tayntons can help you with drawing up a trust in order to escape Capital Gains Tax (CGT) when buying the property, with your current CGT exemption on your primary home being unaffected. Here is how it works.

Prior to buying a property you will need to ensure that a trust is drawn up, and that you loan the deposit monies to the trust which then takes out the mortgage.

The trust can either in the form of a life trust or a discretionary trust where your child is named as a beneficiary and therefore has a right to live in the property rent free.

A discretionary trust will give you as the owner a lot more flexibility since the occupier can change as long as they have a right as a beneficiary. This would be most advantageous to parents who have more than one child and would like to purchase a property for their (multiple) children to live in whilst attending university.

If your child were to move out of the property, you have 18 months to sell it before a capital gains tax liability would start to accrue. Within this 18-month period you can let it out to any tenants you like and it will not affect the CGT exemption.

Outside of the 18-month period, if the property is not occupied by a named beneficiary, CGT may be due for that period.

Please do not hesitate to contact our friendly, reliable team if you have any questions or would like to make an appointment to get such a trust drawn up.

To contact us please call 0800 158 4147 or 03330 145451 or email

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