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Thank you for your response. However from the information you gave me I calculated that my CGT tax liability could potentially be in excess of £50K. I therefore sought further advice that appears to contradict your view so I would interested in your response.
My solicitor believes that as the house was the only property that my in laws had ever lived in, and they remained there until they died, I would only be liable for CGT on any gain made from the date my father in law died (15 Aug 13) until the property is sold even though it was registered in my name some years before when it was apparently classed as a gift with reservation.
However I am also told I would have to declare the property value for inheritance tax purposes even though there should not be any to pay as the combine assets of the estate are worth less than £325K.
Andrew, thank you for your reply.Your in laws lived in the property until they died but the property was transferred to you and your wife in 1996 with no reservation. It was their main residence for the period 1993 to 1996 and any gain during that period would be covered by private residence relief and therefore no capital gains tax payable as far as they were concerned.You never mentioned the transfer was made with reservation.You have stated that the property was transferred to you and your wife at below market value. In the absence of any mention of conditions attached it would appear the property was not given away to you with conditions attached to it. If this is the case then it is not "gift with reservation of benefit" and CGT is chargeable on gain between market value at time of transfer and sale date.More information on this can be found here (look at Inheitance tax when passing on property)http://www.hmrc.gov.uk/inheritancetax/pass-money-property/pass-home-to-children.htm