Leave this with me while I draft an answer.
If you each give away your 1/3rd shares of the property, they will be both gifts for Inheritance Tax purposes and disposals for Capital Gains Tax purposes.
The gifts will be valued at the time they are made and will stay in each of your respective estates for seven years from the time they are made. Take a look here for information on Inheritance Tax.
The cost of the property for CGT purposes will be its probate value, ie the value when your grandmother passed away. So, if the probate value was about £80,000 and you sell it for £300,000, you will each make a paper gain of £73,333 if you give it away. Assuming, none of you have lived in the property during your ownership of it, the only relief you will each be entitled to will be the annual CGT exemption or tax free allowance which currently stands at £11,100. You would each have a net taxable gain of £62,233. This can be reduced by deducting the costs of selling the property (legal fees, selling agent fees etc). There is no taper or inflation relief I'm afraid.
There are two rates of CGT on residential property, 18% and 28%. The rate or combination of rates that you will each pay will be dependent on your respective incomes in the tax year you dispose of the property. Take a look here for information on how to work out your CGT rate.
I hope this helps but let me know if you have any further questions.
General repair costs would normally be deductible from rental income. If you incur renovation and improvement expenditure of the type you have indicated before selling then you can add the costs to the probate value of the property, thereby reducing any gain.
I'm not sure that the Land Registry will hold the probate value. HMRC sometimes use the District Valuer to review estimated property values. The DV has access to historic property sale prices. I'm afraid that the online property sale price records available now don't go back 22 years. Council Tax started in 1991 and the values used at the time still determine the council tax band today so that would give you an idea of the value.
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