Buying property for one's children is not simply an investment decision or a step to secure their future housing; it involves a range of legal and financial considerations that must be resolved before signing the contract and transferring the property's value. Choosing to register the unit directly in the child's name, especially if they are a minor, differs from purchasing it in the father's or mother's name and then transferring ownership to them later, whether in terms of property management and disposal, ownership transfer procedures, or potential tax liabilities.
This issue becomes even more important when the children are under the age of majority, as it is not only about who pays for the property, but also about who is proven to have ownership, who has the authority to manage and dispose of the asset, and what restrictions govern future sale, lease, or mortgage.
The first option: Registering the property directly in the son's name.
This route allows the purchase of the property and its registration in the son’s name from the completion of the transaction, so that he becomes the proven owner in the title deed, even if the father paid for the property. This option achieves clarity in determining the rightful owner, and separates the son’s ownership from the property registered in his father’s or mother’s name, but it calls for attention to the rules of financial guardianship if the son is a minor.
The Ministry of Justice explains, within the requirements for registering real estate ownership , that registering the property in the name of a minor requires a deed of permission from the judge if the guardian is not the father and the minor is under 15 years old. This reflects the existence of a special procedure for registering ownership in these cases, according to the guardian’s status and the age of the son.
Therefore, the documentation requirements should be checked before concluding the contract, especially if the registration is to be in the name of a minor child, or if the person carrying out the procedure is a guardian or custodian other than the father.
Who manages the property if the son is a minor?
Registering the property in the son's name does not mean that he can dispose of it independently before reaching the legal age. Ownership is one thing, and guardianship over managing and disposing of funds is another.
According to the provisions regulating financial guardianship, guardianship over a minor due to age continues until the age of 18 is reached, unless the court decides to continue it when there is a need for it. The guardian takes over the management of the minor’s financial affairs within the limits of the powers prescribed by law, taking into account his interest and not harming his rights.
Article 224 of the Sharia Procedures Law regulates some transactions related to the minor’s funds, and the Ministry of Justice clarifies in the regulatory texts regarding permission for financial transactions the provisions related to buying, selling, and mortgaging real estate.
The importance of these provisions becomes apparent when considering selling, mortgaging, or carrying out substantial transactions on the property, as the permission requirements vary according to the guardian's status and the nature of the transaction. It should not be assumed that the person who paid for the property has the right to sell or mortgage it simply because he is the father or financier, as long as the ownership is registered in the son's name.
The second option: buying the property in the father's name and then gifting it to the children.
Some parents prefer to buy the property in their own names first, and then transfer ownership to their children later through a documented gift. This route gives the parent greater flexibility in managing the property during the period of ownership, but it means that the son does not become an owner until the transfer of ownership is completed and the gift is documented.
It should be noted that transferring property from father to son is not a formal procedure, but rather an independent real estate transaction that has documentation requirements and tax controls that must be met.
In this context, the executive regulations for the real estate transaction tax exempt documented gifts between relatives up to the third degree from the tax. The first degree includes the father, mother, sons, and daughters, as explained by the Zakat, Tax and Customs Authority in the Real Estate Transaction Tax Guide .
However, the exception is linked to an important condition, which is that the recipient of the gift does not transfer the property within three years from the date of documenting the gift to a person who would not be entitled to the exemption if ownership were transferred to him directly from the first donor. If this transaction takes place within the specified period, the exemption is removed and the gift becomes subject to tax according to the regulations.
Is a gift between a father and his children subject to real estate transaction tax?
The original tax on real estate transactions was 5% of the value of the real estate transaction, according to the system that came into effect on April 10, 2025, but the system excludes specific cases, including documented gifts to relatives up to the third degree.
Thus, the transfer of property from father to son through a documented gift can benefit from the exemption, provided that its regulatory requirements are met, most importantly the documentation of the gift and the commitment to a three-year non-disposal restriction in cases where the condition applies.
The Authority confirms on its official page for the Real Estate Transactions Tax System that the general tax rate is 5%, and that exceptions are subject to the provisions specified in the system and its executive regulations.
It is important to distinguish between a gift and a sale. If a father transfers property to his son for a financial consideration in the form of a sale, the exemption from the prohibition on gifts cannot be assumed simply because both parties are family members. The determining factor is the nature and substance of the transaction and the supporting documentation.
The third option: purchasing the property in the names of the adult children.
If the children have reached the age of 18, registering the property in their names grants them independent ownership, and each of them has the right to dispose of his share in accordance with the applicable regulations, taking into account any restrictions arising from mortgages, financing, or rights registered on the property.
The father can finance the purchase or provide the money to the children, but it is necessary to clarify the nature of the amount: Is it a financial gift, a loan, or a contribution towards the purchase of the property? Documenting the financial relationship will prevent future disputes within the family regarding the source of funds and the rights of the parties.
The ownership percentage of each son should also be determined if the property is registered in the names of more than one person, and family agreements not documented in the title deed should not be relied upon.
What about buying a property with mortgage financing for the children?
Purchase procedures differ when relying on mortgage financing, as it is not enough to identify the owner’s name, but it is also necessary to know who the borrower will be, who will provide the guarantees, and whether the property will be registered as mortgaged in favor of the financing entity.
In the case of a minor son, it should not be assumed that he can obtain real estate financing in his name, as eligibility for borrowing and financing is subject to the conditions of the financing entities and the relevant regulations. The financing may be in the name of the father, while the ownership is registered in the name of another party, an arrangement that requires the approval of the financing entity and a review of its legal implications before signing.
If the children are adults, financing can be considered in their names according to the financing entity’s criteria, their income and credit obligations, while verifying that the borrower’s name matches the owner’s and the guarantees provided.
6 things to consider before buying
1- Determine the true owner: Decide whether the property will be registered directly in the son's name or will remain in the father's name until the gift is completed.
2- Checking the son's age: If he is a minor, review the financial guardianship requirements and the procedures for registering and disposing of the property.
3- Documenting the source of funds: Determine whether the property value is a gift, loan, or financial contribution, and keep proof of this.
4- Review financial burdens: Check for any mortgages, financing, or obligations that may restrict the transfer of ownership or disposal of the property.
5- Studying the tax impact: Do not assume that every real estate transfer between family members is exempt from tax; the exemption is related to the nature of the transaction, its documentation and conditions.
6- Clearly specifying the shares: If the property is owned by more than one son, the share of each of them must be proven in the title deed.
Which of the two options is more suitable for the family?
There is no single path that works for all cases. If the goal is to give the son permanent ownership of the property from the beginning, then registering it directly in his name may be the clearest option in terms of ownership, taking into account the provisions for minors and financial guardianship.
If the father wants to retain ownership and management of the property for a period, and then transfer it to his children, the purchase can be considered in his name first, and then the gift can be documented later, while adhering to the tax and procedural regulations.
In both cases, the decision should not be based solely on the cost of purchase, but rather on the nature of the property, the age of the children, their future rights, the possibility of disposing of the property, and the obligations that may arise from financing or transferring ownership.
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