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Hi.The cost of the property for CGT purposes is the value of the property when your sons inherited it from their mother, the probate value. That will be split between them equally.If one of your sons sells his half to his brother, the sale will be deemed to have occurred at the open market value which may give rise to a gain for the selling brother. If the sale occurs in the current tax year, 2015/16, the first £11,100 of the gain will be exempt from CGT.There are two rates of CGT, 18% and 28%. The rate or combination of rates that the selling son will pay will be dependent on the level of his income in the tax year that the property is disposed of. Assuming that occurs in 2015/16, one of the following scenarios will apply:1 If the sum of the selling son's income and the net taxable gain in 2015/16 is £42,385 or less, then all the taxable gain will be charged to CGT at 18%.2 If the selling son's income alone in 2015/16 is £42,385 or more in 2015/16, then all the taxable gain will be charged to CGT at 28%.3 If the selling son's income alone in 2015/16 is less than £42,385 but greater than £42,385 when the net taxable gain is added, then part of the net taxable gain will be charged to CGT at 18% and part at 28%.All the above assumes that the property has not been the main home of the selling son during his part ownership of it.
As for the buying son, the property will become his main home and on a future disposal he will be entitled to some main residence relief and letting relief which you can read about in HS283 here.I hope this helps but let me know if you have any further questions.