Two main ways to transfer an apartment to your child
When you want to pass a residential apartment to a child, you generally have two choices: transfer it now as a gift, or leave it later through a will. Each option has different legal steps, tax effects and personal implications. Understanding them helps families make a clear, confident decision.
Gift now: immediate transfer
Giving the apartment as a gift means signing paperwork while you are alive so ownership moves to your child immediately.
Pros
- Clear ownership: Your child becomes the legal owner right away.
- Avoids probate: The property won’t need to go through will-related court procedures later.
- Estate size reduced: Can lower the value of your estate for future inheritance matters.
Cons
- Tax events: Gifts can trigger taxes or reporting requirements depending on local laws.
- Capital gains: The child may inherit your original cost basis for capital gains tax when selling.
- Loss of control: Once gifted, you no longer control or easily reclaim the property.
Will: transfer after death
Including the apartment in your will means ownership passes to your child only after you die and the will is executed.
Pros
- Retain control: You keep using and managing the property during your lifetime.
- Flexibility: You can change your mind and update the will if circumstances change.
- Potential tax benefits: In some places, assets transferred at death may receive a stepped-up tax basis.
Cons
- Probate: The will may need to be validated in court, which can be time-consuming and public.
- Family disputes: Wills can be contested, leading to delays or legal costs.
Key legal and tax considerations
- Documentation: Gifts usually require a registered gift deed and transfer of title; wills must be validly executed and may require probate.
- Stamp duty and registration: Many jurisdictions charge fees when transferring property — rates differ for gifts and inheritances.
- Capital gains tax: The tax basis and timing of any capital gains tax depend on whether the transfer is a gift or inheritance.
- Gift or inheritance tax: Some places tax large gifts or estates. Exemptions and thresholds vary widely.
- Means-tested benefits: Transferring assets can affect eligibility for government benefits in some systems.
Personal and family implications
Beyond law and taxes, think about family dynamics and your long-term needs:
- Does gifting the apartment risk your financial security in later life?
- Would other heirs feel treated fairly if you transfer property to one child?
- Would the child be ready to manage maintenance, taxes and mortgage responsibilities?
How to decide
There’s no one-size-fits-all answer. Consider these steps:
- Get professional advice: Consult a property lawyer and a tax advisor who know local rules.
- Estimate costs: Compare likely taxes, fees and long-term financial impacts for both options.
- Discuss with family: Clear communication can prevent disputes later.
- Document your plan: Use proper legal documents — a registered deed for gifts or a well-drafted will.
Quick checklist before you act
- Confirm local stamp duty, gift and inheritance tax rules.
- Check mortgage and lender consent if the apartment has a loan.
- Decide whether you need to retain use rights (life interest) if gifting.
- Prepare clear, signed legal documents and register the transfer where required.
Choosing between gifting an apartment now or leaving it in a will has practical, tax and emotional consequences. A short consultation with legal and tax experts plus open family conversations will help you pick the path that fits your situation.